Tariffs leave NC’s trade deficit largely unmoved

According to the latest data from the US Bureau of Economic Analysis (BEA), the 2025 trade deficit was $901.5 billion, down slightly from $918.4 billion in 2024. Expert analysis reveals the impact of trade patterns stemming from the deficit across major industries, including agriculture and pharmaceuticals, two of the state’s largest. 

In 2025, the goods and services deficit decreased by $2.1 billion, or 0.2%, from 2024, according to the BEA. Exports went up by $199.8 billion or 6.2% from 2024, while imports increased $197.8 billion or 4.8%.  

Data from the BEA indicates that in December the deficit was $70.3 billion, up from $50.3 billion in November, a 32.6% increase. Exports in December were $287.3 billion, down $5 billion from November. December imports were at $357.6 billion, up $12.3 billion from November. 

Despite being one of the state’s largest commodities, North Carolina has seen a year-over-year decline in tobacco production. According to the BEA report, unmanufactured tobacco fell year over year by $218 million, from $1,059 million in 2024 to $841 million in 2025. Manufactured tobacco increased by $328 million from $529 million in 2024 to $867 million in 2025.

As the nation’s leading tobacco producer, North Carolina produces 260.1 million pounds of tobacco annually, accounting for 60% of US tobacco production. North Carolina has 822 tobacco farms, generating $557 million in revenue and adding $197 million to the state’s GDP, according to a report from the John Locke Foundation. Tobacco manufacturers in the state generate $36 billion in output and contribute $31 billion to the state’s GDP, employing approximately 5,000 workers and paying them $370 million in wages. The tobacco wholesale sector generates $15.3 billion in revenue, adds $9 billion to GDP, and supports around 4,500 jobs.

Turning to another industry, North Carolina’s trade in pharmaceuticals remains strong. Pharmaceutical preparation exports increased by $1.3 billion in December, while imports decreased by $4.6 billion, according to BEA data.

In 2025, pharmaceuticals were the top trade commodity in North Carolina, according to data from the Economic Development Partnership of North Carolina (EDPNC). Pharmaceutical exports were at $8.6 billion year-to-date through August. On the import side, pharmaceuticals generated $19.6 billion year-to-date through August. Compared to last year, exports are up by 13.3% and imports are up by 74.2%. 

“We were promised two main things from Trump’s tariff regime: more manufacturing jobs and a major decrease in the trade deficit,” Brian Balfour, VP of research for the John Locke Foundation, told the Carolina Journal. “So far, we are oh for two. Manufacturing jobs have fallen since Trump’s ‘Liberation Day,’ both nationally and in North Carolina, despite overall job growth. And this latest data confirms that the trade deficit has not been reduced.” 

Recent data from the Census Bureau, cited by the New York Times, shows that despite Trump’s promises that tariffs would reduce the deficit and bring manufacturing back to America, tariffs have not only increased the deficit but also led American manufacturers to “cut more than 80,000 jobs last year.” 

“Tariffs deny US consumers access to affordable foreign-made goods, while also denying US manufacturers access to low-cost inputs for their production,” said Balfour. “And when foreign countries predictably retaliate with tariffs of their own, US companies see their access to foreign markets reduced, hurting their bottom line. Protectionist policies like tariffs may provide some benefit for the protected companies and industries, but, on net, they end up doing more harm than good.”

On Feb. 20, the US Supreme Court ruled, in a 6-3 decision, that Trump does not have the power to use federal IEEPA emergency powers to impose tariffs. 

“Tariffs leave NC’s trade deficit largely unmoved” was originally published on www.carolinajournal.com.