U.S. Trade Deficit Widens Sharply as Tariff-Driven Volatility
Returns
The monthly
trade deficit and imports rebounded in November after shrinking significantly in
prior months, new data show.
·
The U.S.
trade deficit in goods and services rose to $56.8 billion in November,
a 95% increase
from October.
·
The rebound came after several months of decline and
reflects volatility caused
by President Trump’s tariffs.
·
Exports fell 3.6% to $292.1
billion, led by lower shipments of gold, pharmaceuticals, consumer goods,
and crude oil.
·
Imports rose 5% to $348.9
billion, driven by higher purchases of foreign pharmaceuticals
and equipment for data centers.
·
The October
trade deficit was the lowest
monthly level since June 2009, but economists say this was due
to temporary
product-specific fluctuations, not structural change.
·
Gold trade played a major role, as investors moved
into the metal amid tariff-related uncertainty.
·
Businesses front-loaded
imports early in Trump’s presidency to avoid tariffs, then pulled back after global tariffs were
announced in April, causing sharp swings.
·
Tariffs also caused irregular
import patterns in sectors like pharmaceuticals and semiconductors.
·
From January–November,
the U.S. goods trade
deficit with China fell to $189 billion, now lower than the deficit with the EU
and only slightly higher than with Mexico.
·
Despite shifting shipment timing, overall trade volumes remained near
normal levels.
·
Through November, the overall trade deficit was still 4.1% higher
than the previous year.
·
For the first 11 months of 2025:
o Exports increased 6.3%
year-on-year
o Imports increased 5.8%
year-on-year
·
Economists warned the November deficit surge could reduce Q4 GDP growth estimates,
since net imports subtract
from GDP.
·
The monthly
increase in the deficit was the largest on record, excluding
January when Trump returned to office.
·
The Supreme
Court is set to rule on the legality of many tariffs imposed
under a 1970s emergency
law.
·
The administration has said any invalidated tariffs would
be replaced using
alternative legal mechanisms.
·
The U.S. has imposed tariffs on nearly all countries,
with additional levies on strategic
sectors such as steel, copper, and furniture.
·
By January, the effective
U.S. tariff rate reached nearly 17%, the highest since 1935.
The U.S. trade deficit in goods and services rebounded to $56.8
billion in November, rising 95 percent from the previous month as President Trump’s
tariffs continued to cause huge fluctuations in trade, according to data from the
Commerce Department released on Thursday.
Exports fell 3.6 percent in the month, to $292.1 billion, led
by declining outbound shipments of gold, pharmaceuticals, consumer goods and crude
oil. Imports rose 5 percent in November, to $348.9 billion, as Americans bought
foreign pharmaceuticals as well as equipment to fill new data centers. The combination
pushed up the monthly trade deficit, the gap between what the United States imports
and what it exports.
The data reflected some of the intense volatility that has resulted
from the president’s decision to impose steep taxes on imports over the past year.
The trade deficit had fallen significantly in prior months, seemingly accomplishing
a major goal for Mr. Trump, who views that metric as a sign of economic weakness.
The October trade deficit was the lowest monthly figure recorded since June 2009.
But much of that drop was the result of temporary fluctuations
in trade in certain products, like gold, which investors have sought out as a haven
amid tariff-related turmoil. Economists have cautioned against a single-minded focus
on the trade deficit, saying that it can move for a wide variety of reasons, and
that last year was particularly volatile when it comes to trade.
In the early months of Mr. Trump’s presidency, companies rushed
to bring goods into the country before tariffs took effect, causing imports and
the trade deficit to spike. After Mr. Trump announced global tariffs in April, shipments
of imports fell back. Other types of products, like pharmaceuticals and semiconductors,
have also seen import surges and declines as the president announced, imposed and
changed tariffs throughout the year.
The tariffs have also shuffled trade with various countries.
From January to November, the goods trade deficit with China was only $189 billion,
less than the United States’ trade deficit with the European Union, and only slightly
larger than America’s trade deficit with Mexico.
While importers have changed the timing of their shipments to
avoid tariffs, when added together trade still approximated normal levels. Last
year through November, the overall trade deficit was still up 4.1 percent from the
previous year.
Exports for the first 11 months of 2025 were 6.3 percent higher
than the previous year, while imports were 5.8 percent higher. Data for December
and the full year will be released next month.
The question for economists now is where trade goes from here,
and if the president’s policies continue to lower imports or the trade deficit in
the long term.
Diane Swonk, chief economist at KPMG, said the increase in the
trade deficit from October to November was the largest monthly increase on record,
apart from the surge last January when Mr. Trump returned to office. The trends
were driven by the trade in gold, as well as pharmaceuticals, a sector that “was
incredibly volatile in 2025,” she said.
Eugenio Aleman, the chief economist for Raymond James, an investment
bank, said the increase in the monthly deficit was “larger than expected” and would
bring down projections for U.S. economic growth in the fourth quarter. Net imports
are subtracted from economic growth figures to avoid double counting, so the drop
in the trade deficit in prior months had increased estimates for U.S. gross domestic
product.
Tariffs could undergo more changes in the weeks to come. The
Supreme Court is set to rule soon on the legality of many of the tariffs that Mr.
Trump issued using a 1970s emergency law, though the Trump administration has said
any levies that are struck down will be quickly replaced using other legal
workarounds.
The administration has used the emergency law to impose tariffs
on nearly all countries and added more levies to products and sectors it deems important
to national security, including steel, copper and upholstered furniture. As of January,
the U.S. effective tariff rate had climbed to nearly 17 percent, the highest level
since 1935.