Trade deficit narrows, manufacturing jobs keep falling, and the Fed stays hard to read

The June trade deficit shrank as American companies paused their import binge after stockpiling earlier in the year in anticipation of tariff hikes. Imports fell, exports didn't, and the gap narrowed. But the underlying story is more complicated: U.S. demand for computer chips from Asia remains strong thanks to continued AI spending, and the tariff wars have reshuffled trading partners more than they've reshored production. China lost ground; Southeast Asia gained. Meanwhile, the White House's claim that tariffs are driving a manufacturing revival doesn't match the data.

Tariffs haven't brought factory jobs back

Since President Trump began his second term in January 2025, the economy has lost 75,000 manufacturing jobs — a decline of six-tenths of a percent. Manufacturing output has actually risen 1.1 percent over the last year, but that's because factories are doing more with fewer people. As economist Mark Zandi put it, "Manufacturing activities are very mechanized, automated. So even if you see a pickup in output, and we've seen that particularly in the tech sector and the defense, aerospace industries, doesn't translate into jobs because you know these factories just don't employ a lot of people."