AI craze and oil exports: Why America's trade deficit is shrinking (and tariffs are completely useless)
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Published on: June 12, 2026 / Updated on: June 12, 2026 – Author: Konrad Wolfenstein
AI craze and oil exports: Why America's trade deficit is shrinking (and tariffs are completely useless) – Image: Xpert.Digital
Oil boom instead of tariff success: The inconvenient truth behind the shrinking US trade deficit
Trump's tariffs fail in court – but a global crisis suddenly saves the US balance sheet
The billion-dollar own goal: How Trump's trade war is punishing his own economy
A surprisingly small US trade deficit in April 2026 recently brought a sigh of relief to the markets – but a first glance at the figures is wildly misleading. Behind this apparent success lies not a triumph of aggressive US tariff policy, but a volatile mix of geopolitical emergencies and legal chaos. While the ongoing war in Iran is driving American oil exports to historic highs and the global AI boom is fueling American technology imports, the Trump administration's unprecedented tariffs are failing one after another in American courts. At the same time, the political narrative from Washington consistently ignores the lucrative services sector, in which US tech giants earn billions worldwide. A more in-depth analysis reveals that current American trade policy is less a strategic masterstroke than a ride on a geopolitical volcano – and the trade deficit merely a reflection of profound macroeconomic realities that cannot be circumvented by tariffs.
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When your own toolbox contains the wrong tool: Trump's trade policy put to the test of reality
In April 2026, the US Department of Commerce reported that the American trade deficit had decreased slightly to $55.9 billion compared to the previous month. In March, the deficit had stood at $56.6 billion; analysts had even expected a slight increase, which is why the news was received positively by the markets. This development was not due to a structural change in American foreign trade, but rather to a very specific, partly geopolitically driven export boom – particularly in petroleum products.
It was the export side that made the surprise possible: US exports grew by 2.6 percent compared to the previous month, reaching a record high of $327.1 billion. At the same time, imports also increased, rising by 2.0 percent to $383 billion, but at a slightly slower pace – which, mathematically speaking, narrowed the gap between the two figures somewhat. While the headline "Trade deficit reduced" sounds reassuring at first glance, a closer look at the composition of these figures is worthwhile, as it tells a considerably more complex story.
Oil as a geopolitical export engine
The decisive driver behind the record exports was crude oil. US crude oil exports rose to 5.2 million barrels per day in April – an increase of more than 30 percent compared to February. This is due to the ongoing war in Iran, which began at the start of the year and has severely restricted shipping through the Strait of Hormuz. Oil exports through this strategically important waterway are now only at about five percent of normal levels, which has caused global demand for American energy commodities to surge.
The US benefits from this situation on several levels simultaneously: It is not only a producer but is increasingly acting as a substitute supplier for markets in Europe and Asia that have lost their supplies from the Middle East. According to ship tracking data, around 47 percent of US crude oil exports went to Europe in April, and another 37 percent to Asia. In a historical context, it is noteworthy that the US temporarily approached net crude oil export status – the first time since World War II. Exports of liquefied natural gas (LNG) also reached record levels, as US LNG partially filled the supply gap created by the Hormuz outage.
In addition to energy products, capital goods also contributed to the export growth at the commodity level: Exports of both computers and civilian aircraft increased, underscoring the continued competitiveness of the US in certain high-tech segments. However, this development should not obscure the fact that a significant portion of the current export boom is attributable to an extraordinary, war-related surge in demand, which would not have occurred without the corresponding geopolitical event.
AI hunger drives import growth in technology
On the import side, the dynamics were less dramatic, but no less economically interesting. Imports of computers and semiconductors rose disproportionately – a phenomenon directly linked to the global investment boom in artificial intelligence. Data center expansion, GPU procurement, and the entire infrastructure for large-language models are generating import demand that cannot be met in the short term by domestic production and is structurally driving up US goods imports.
This is a fundamental dilemma for the Trump administration's trade policy: The technological transformation intended to keep America competitive is, in its current implementation, import-intensive. Anyone building AI infrastructure buys chips and components from Taiwan, South Korea, and the Netherlands—inevitably increasing the deficit that tariffs are supposed to reduce. This contradiction between industrial policy ambition and trade policy objectives is one of the least discussed design flaws in the current US administration's economic policy framework.
The record deficits of 2025 – the failure of customs logic
To properly contextualize the April figures, it's necessary to look back at the entire year of 2025. Despite the aggressive tariff policy that Trump launched after his inauguration in January 2025, targeting China, the EU, Mexico, and Canada, the US trade deficit did not decrease last year; in fact, it reached a historic high for goods. The goods trade deficit amounted to $1.24 trillion in 2025 – 2.1 percent higher than in 2024. Only the combined trade in goods and services saw a minimal improvement: the overall deficit shrank from $903.5 billion to $901.5 billion – a difference of just $2 billion in a total volume of almost $1 trillion.
The economic failure of this tariff strategy comes as no surprise to experts. A study by the Kiel Institute for the World Economy (IfW) found that 96 percent of the costs incurred by tariffs are borne not by foreign exporters, but by American importers and end consumers. IfW Research Director Julian Hinz succinctly summarizes the situation: the tariffs are an own goal. A fundamental economic principle that Trump and his advisors either ignore or deliberately fail to communicate is the identity between the current account and the capital account: the US trade deficit is ultimately an expression of the inflow of capital into the American economy. As long as the US remains an attractive investment location, as long as the dollar is the world's reserve currency, and as long as America consumes and invests more than it saves, the deficit will structurally persist—regardless of the level of tariffs.
The legal fiasco: When customs duties are declared illegal
Regardless of the tariffs' economic ineffectiveness, Trump's trade policy ran into serious legal trouble in 2026. First, at the end of February 2026, the US Supreme Court ruled the International Emergency Economic Powers Act (IEEPA) insufficient as a legal basis for sweeping import tariffs – by a vote of six to three. This rendered the reciprocal tariffs imposed under this law, including those against Canada and Mexico, as well as the so-called "Liberation Day" tariffs of April 2025, unlawful and they must be refunded.
The government then resorted to a new legal basis: On February 24, 2026, a flat tariff of ten percent on all US imports was imposed based on Section 122 of the Trade Act of 1974. However, this alternative approach also proved legally unstable. On May 8, 2026, the Court of International Trade in New York ruled two to one that these tariffs were also unlawful – Trump had misinterpreted the relevant trade law and failed to adequately demonstrate the fundamental balance-of-payments problems required by law. Although the appeals court temporarily suspended the ruling on May 13, meaning importers must continue to pay ten percent for the time being, the legal uncertainty remains entirely intact. Further tariffs are already being prepared but are in a state of political and legal limbo, unsettling both investors and importers.
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Why the US trade deficit excluding services paints a false picture
The complete picture: What happens when you include services?
At this point, it is worthwhile to adopt a perspective that is almost always missing in the public debate about the US trade deficit: the inclusion of trade in services. Trump's tariff rhetoric focuses exclusively on the goods deficit and thus conveys a fundamentally distorted picture of actual trade relations – especially with the European Union.
In 2023, the EU exported goods worth €503 billion to the US, while importing goods worth €347 billion from there – an EU surplus of €157 billion. However, when considering trade in services, the picture changes: in 2023, the EU imported services worth €427 billion from the US, but exported services worth only €319 billion – an EU deficit of €109 billion. Combining goods and services, the EU surplus with the US amounts to a mere €48 billion, representing just three percent of the total bilateral trade volume of €1.6 trillion.
For 2025, the American Chamber of Commerce estimates the combined US trade deficit with the EU at around $150 billion – substantial, but significantly lower than the isolated trade deficit of $219 billion. Crucially, the EU's trade deficit with the US has grown structurally and, according to Bundesbank data, already amounted to €188 billion for the Eurozone in 2025. It is driven by licensing fees for intellectual property, IT services, cloud computing, and financial services – in other words, by the dominance of American technology companies like Apple, Microsoft, Alphabet, Amazon, and Meta in European markets. This digital trade balance is absent from Trump's deficit narrative because it would disrupt the politically desired picture.
Completeness of analysis is also crucial at the macroeconomic level. The European Central Bank reports that the euro area's current account surplus fell to €255 billion in 2025, compared to €407 billion the previous year – a significant decline attributable, among other things, to increased deficits in US intellectual property licensing fees. In other words, European companies and consumers are paying more and more for American software, platforms, and patents – thereby increasing the inflow of American service export revenues. These transfers are real, statistically recorded, and economically significant – yet they are consistently omitted from the tariff debate.
Related to this:
The structural roots of the deficit – why tariffs are the wrong tool
The US trade deficit is not a sign of weakness, nor is it a sign of exploitation by other countries. It is primarily a reflection of macroeconomic imbalances: the US saves less than it invests, and the difference is financed by capital inflows from abroad. The persistent current account deficit is the logical flip side of the persistent capital account surplus—and this capital inflow reflects global confidence in US capital markets, the dollar, and American legal certainty.
Several profound structural factors are relevant here. First, the high economic growth of the US naturally attracts imports because a growing economy consumes more – including imported goods. Second, American consumers show a strong preference for foreign goods, particularly vehicles, electronics, and consumer goods, a preference that has developed historically and can be explained by price advantages. Third, the role of the US dollar as the world's reserve currency creates a structurally overvalued currency, which makes imports cheaper and exports more expensive – a phenomenon economists know as the "Triffin dilemma," which cannot be eliminated by tariffs. Fourth, the chronic US fiscal deficit – the so-called twin deficit – contributes to the trade gap because government spending reduces private and public savings rates.
Against this backdrop, the demand to close the trade deficit through import tariffs is economically naive. Even if tariffs temporarily redirect certain import flows, compensation occurs elsewhere: importers switch suppliers, consumers pay more, inflation rises, real wages fall, and the deficit shifts to other partners. The statistics for 2025 prove precisely this: the goods deficit continued to rise despite unprecedented tariffs. Economist Bill Winegarden puts it succinctly: "Unlike the budget deficit, the trade deficit is meaningless. It has nothing to do with affordability, and it has nothing to do with growth."
Geopolitics overrides trade policy: The Iran factor
If April 2026 teaches us anything, it's this: Geopolitical events can achieve in a few weeks what years of trade policy interventions have failed to accomplish. The war in Iran recalibrated global energy markets in a short period and placed the US in a historically unprecedented position as the world's energy supplier. The massive surge in oil prices and demand for American oil and gas catapulted export statistics to record levels within a single month.
This development comes at a price. The rise in oil prices resulting from the Iran war is putting considerable domestic pressure on Trump, as it is directly felt at the pump. The US has therefore begun releasing 172 million barrels of strategic oil reserves to mitigate the price increase. At the same time, according to Goldman Sachs calculations, visible global oil inventories are shrinking by an average of 8.7 million barrels per day – almost twice as fast as at the beginning of the conflict. The Strait of Hormuz is currently processing only five percent of its normal oil flow, prolonging the structural supply shortage indefinitely.
US trade policy is thus sitting on a geopolitical volcano: it benefits in the short term from a war-related boom in energy exports, but at the same time contributes to global inflation and economic destabilization, which could dampen domestic export demand in the long term. The trade deficit in April is therefore less a sign of economic policy competence than a windfall profit from a humanitarian catastrophe.
What remains: A sober assessment
The slight decrease in the US trade deficit to $55.9 billion in April 2026 is real, but contextualized, it is not reassuring. It is primarily due to a war-related energy export boom, not to the proclaimed successes of tariff policy. On an annual basis, the Trump administration has achieved the opposite of its stated goal: The 2025 goods deficit was the largest in US history, and the planned tariff architecture is in a legal state that is eroding its institutional foundations.
Instead of focusing on tariffs, what's economically necessary is an honest socio-political debate about the true causes of the deficit: a low national savings rate, a persistent fiscal deficit, the structural overvaluation of the dollar, and chronically above-average domestic consumption. Including trade in services in the political analysis would also significantly relativize the narrative of "exploited America": The trade balance with the EU, measured in goods and services combined, is almost even – and American tech companies earn billions daily in European licensing fees that are never mentioned in the president's tariff-related tweets.
The legal fragmentation of US tariff policy—court rulings at various levels, temporary suspensions, and new legal frameworks emerging weekly—creates uncertainty that burdens investors, importers, and international trading partners alike, structurally damaging confidence in the reliability of the American trade legal system. What was intended as a strength is increasingly perceived as arbitrariness—and arbitrariness is the most expensive commodity in global trade.
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