The largest U.S. deficits in the last four months have been with three countries —Taiwan, Mexico and Vietnam — and not China.

Tatiana Panzardi, WorldCity

The largest monthly U.S. trade deficit is now with Taiwan, the third country in the last four months to have the dubious distinction that was once the sole province of that poster child of trade deficits, China.

The other two countries with top U.S. deficits in the last four months have been Vietnam (January) and Mexico (November). Taiwan, in addition to February, was also No. 1 in December, according to my analysis of the latest U.S. Census Bureau data available.

Trade was not always so topsy-turvy. The U.S. deficit with China was the largest for at least 266 consecutive months, until last year at this time.

Taiwan’s story is all about massive, AI-driven investments by Amazon, Microsoft, the parent companies of Google and Facebook, and others in computer hardware for data centers – much of it sourced from Taiwan.

The U.S. deficit with Taiwan in February was $17.04 billion, slightly larger than the deficit with Mexico at $15.40 billion, and Vietnam at $14.43 billion. The U.S. deficit with China stood at $11.01 billion in February.

A great deal of U.S. imports in the computer category (HS 8471) once came from China in what now seems like a simpler, slower-paced time. That changed when President Trump began his trade war with China in 2018.

At the time, the U.S. deficit with China was five times larger than any other U.S. deficit. Now, it ranks fourth, both for just the month of February and for the combined two months of the year.

The 266-month run with China atop the list of the United States’ top merchandise trade deficits was from January of 2003, as far back as I can peer into the data, until March of 2025, when the string was broken and the deficit with Mexico was the largest.

Another five times in 2025, the monthly U.S. deficit with Mexico was larger than the deficit with China. The annual U.S. deficit with China in 2025, which only seven years earlier had been five times as great as the one with Mexico and was still the largest, was only 2.62% greater.

Taiwan has another distinction. It is the first country other than China to have the top U.S. trade deficit for more than one month on a year-to-date basis since 2001. Through February, Taiwan has the largest U.S. trade deficit, at $33.18 billion.

The ranking changes over the last four months reflect three powerful forces. The first is Trump’s trade policy, including the China trade war from his first term and the broader tariff regime of his current term, which has pushed imports toward countries such as Vietnam, Taiwan, Japan and India. (The Supreme Court declared the IEEPA tariffs unconstitutional, which were the most broadly used, earlier this year.) Second is Mexico’s continued strength as a trade partner, driven by both U.S. energy exports and a wide range of automotive and other imports. Third is the AI boom, which has sharply increased demand for computer hardware and shifted more of the U.S. deficit toward Taiwan.