US Trade Deficit Soars to $56.8 Billion in November
DamonUS trade deficit sharply widened in November to $56.8B, exceeding forecasts and impacting Q4 GDP outlook.
The U.S. trade deficit widened sharply in November, nearly doubling from the prior month as a rebound in imports outpaced a drop in exports. The gap in goods and services trade reached US$56.8 billion, a stark contrast to the US$44 billion deficit economists had forecast.
The November figure marks a significant reversal from October, when the trade gap had narrowed to its lowest level since 2009.
What Drove the Widening Gap?
The monthly trade balance was shaped by two opposing trends:
• Imports Increased: Overall imports rose by 5%, boosted by inbound shipments of capital goods, including computers and semiconductors. A surge in pharmaceutical imports also contributed to the increase.
• Exports Fell: The value of all U.S. goods and services exports declined by 3.6%. A notable factor in the drop was a slide in gold exports.
These figures are not adjusted for inflation.
Tariff Policies Amplify Trade Swings
Recent U.S. trade data has been marked by significant volatility, largely driven by the implementation of the Trump administration's trade policies.
Wide monthly swings in specific categories, such as non-monetary gold and pharmaceutical preparations, have become common as companies react to shifting tariff announcements. November's trade figures show this trend continuing, with a jump in pharmaceutical imports and a fall in gold exports directly impacting the headline number.
Rethinking Q4 GDP Expectations
The latest trade data will prompt economists to adjust their estimates for fourth-quarter (4Q) gross domestic product (GDP).
Before this report, the Federal Reserve Bank of Atlanta's GDPNow model had forecast that net exports would add a substantial 1.88 percentage points to 4Q growth. The unexpectedly large November deficit puts that optimistic projection at risk.
On an inflation-adjusted basis, which is used to calculate real GDP, the merchandise trade deficit widened to US$87.1 billion—the largest in four months. It is important to note that trade in non-industrial gold, such as for investment purposes, is excluded from the government's official GDP calculation.
