By Gloria Ogbonna
A new annual report from the Office of the U.S. Trade Representative highlights what it describes as a major shift in America’s economic trajectory under President Donald Trump, pointing to tariffs as a central driver in reducing the nation’s trade deficit with China and revitalizing domestic industry.
According to the report, the United States has, for the first time since 2000, ended China’s long-standing position as the trading partner with which America holds its largest trade deficit. Officials say this marks a significant turning point in U.S. trade policy and global supply chain strategy.
U.S. Trade Representative Jamieson Greer credited the administration’s tariff policies for reshaping trade flows and reducing dependence on Chinese imports. In the report, Greer argues that the “America First Trade Policy” is producing measurable results for American workers and manufacturers.
“Evidence from the past year demonstrates the America First Trade Policy is working,” Greer wrote, emphasizing that since tariffs were implemented in April 2025, the U.S. goods trade deficit has declined on a year-over-year basis every month through December 2025.
The most notable shift came in trade with China. The report states that the U.S. trade deficit in goods with China dropped by 32 percent year-over-year in 2025. As a result, China is no longer the country with which the United States runs its largest trade imbalance — a milestone not seen in more than two decades.
Greer noted that in just one year, the United States significantly diversified its sources of imports, reducing reliance on Chinese supply chains while encouraging businesses to seek alternative trading partners or invest domestically.
Beyond trade balances, the report highlights improvements in American manufacturing. In January 2026, a key survey-based indicator showed factory activity expanding for the first time in over two years. The report describes this as a signal that U.S. industrial output is regaining momentum after a prolonged slowdown.
Manufacturing productivity also improved steadily throughout 2025, reversing what the report calls a troubling multi-year decline in absolute output. Supporters of the tariff strategy argue that the policy has provided incentives for companies to increase domestic production rather than depend heavily on overseas manufacturing.
The steel industry is cited as a notable example. In 2025, the United States surpassed Japan in crude steel production for the first time since 1999, becoming the world’s third-largest steel producer — trailing only China and India. Officials say this milestone reflects both increased domestic demand and expanded production capacity.
The report also outlines gains in wages and income. Real personal disposable income — adjusted for inflation — grew by 1.6 percent in 2025. Meanwhile, average private-sector earnings increased by more than $2,700 during President Trump’s first 12 months in office, according to the analysis.
Greer added that in the second half of Trump’s first year, when tariffs were fully implemented, the broader economy grew at an annualized rate of 2.3 percent. This growth, he argued, occurred despite challenges such as a government shutdown that he attributed to Congressional Democrats.
“It’s not just rhetoric; the data tell the story,” Greer wrote in conclusion. “America is back.”
The report presents the administration’s tariff strategy as a cornerstone of its broader economic agenda, framing reduced trade deficits, rising industrial output, and higher wages as evidence of a rebalanced trade system aimed at strengthening America’s working and middle class.
Source Breitbart