Source: Economics Group of Wells Fargo Bank, N.A.
Summary
The U.S. trade deficit widened in November amid a faster gain in imports than exports. There were still some data collection quirks in Canada influencing the November data, but the recent trend is consistent with a broad gain in trade flows ahead of potential Trump Administration tariffs this year.
Widening Deficit: Calm Before Tariff Storm?
The U.S. international trade deficit widened to $78.2 billion in November. While exports increased a solid 2.7% over the month, it was not enough to outpace imports, which rose 3.4%. In dollar terms, imports rose $11.6 billion, or the most in two and a half years. There looks to be some payback from an unusually weak October, when every major category of end-use goods declined, but overall import gains were fairly broad based.
Pulling back from the month-to-month volatility, imports have outpaced exports on average the past six months or so at an annual rate (chart). Merchandise exports are up 6.6% on year-ago basis, signaling that trade outflows are sturdy relative to their pre-pandemic norm of roughly 4.5%. But imports are also strong; over the past year, goods imports have risen 9.4%.