Trade Gap Nearly Doubles in November. Tariffs Didn’t Stop the Swing

CNBC, Bloomberg, Reuters, the New York Times, the Wall Street Journal, and Market Watch contributed to this report.

The US trade deficit lurched back to life in November, nearly doubling from October as imports jumped and exports fell – a blunt reminder that slapping on tariffs hasn’t turned trade math into a neat political victory.

Here’s the cold number: the trade gap shot up 94.6% from October to $56.8 billion in November, the Commerce Department and Census Bureau reported. That’s a massive monthly move – the biggest percentage jump since March 1992 – and roughly one-third of the increase was driven by a wider shortfall with the European Union, which swelled by about $8.2 billion. Meanwhile, the goods deficit with China actually ticked down slightly to about $13.9 billion.

So what caused the spike? Two things, mostly: a surge in imports – especially capital goods tied to the AI and data-center boom – and a pullback in exports. Total imports rose 5.0% to $348.9 billion, with goods imports climbing 6.6% to $272.5 billion. Capital-goods imports (think computers and semiconductors) jumped $7.4 billion to a record high, a clear signal companies are still buying expensive kit to build out AI infrastructure. At the same time, exports fell 3.6% to $292.1 billion, weighed down by lower shipments of industrial supplies (including non-monetary gold and crude oil) and a drop in consumer goods exports.

The net effect: the goods trade deficit widened 47.3% to $86.9 billion. And because net exports are subtracted when calculating GDP, that reversal from a historically low October deficit is likely to shave off some of the headline economic growth boost economists were counting on for the fourth quarter.

Economists weren’t thrilled. Diane Swonk, chief economist at KPMG, pointed to the unusual volatility in trade this year – calling November’s jump “the largest monthly increase on record” aside from last January’s spike when the Trump administration first returned to office. Eugenio Aleman of Raymond James said the surprise would likely prompt forecasters to scale back their GDP estimates for Q4.

President Trump has made tariffs a centerpiece of his trade playbook, arguing that higher duties would shrink the deficit and “bring manufacturing home.” In April 2025 the White House announced expansive “reciprocal” tariffs and later softened parts of that approach after negotiations with the EU led to a framework that capped duties at 15% on many European goods.

But the November report shows how messy the reality is. Tariffs shift the timing and routing of shipments more than they instantly shrink trade. Importers rushed goods into the US earlier in the year to dodge new levies, sending imports and the deficit spiking initially; later months saw a pullback as that front-loading eased. Now, capital spending and swings in specific product categories (gold and pharmaceuticals, in particular) have driven the deficit back up.

Add to that policy uncertainty – the Supreme Court is set to rule soon on the legality of key tariffs imposed under a 1970s emergency law – and the scene gets even murkier. If certain levies are struck down, the administration has signaled it will look for legal workarounds.

Dig into the categories and this looks less like a broad collapse of US competitiveness and more like big swings in a few sectors. Imports of consumer goods leapt $9.2 billion, driven largely by pharmaceuticals. Imports of industrial supplies fell by $2.4 billion. Exports of industrial supplies and materials dropped $6.1 billion, reflecting lower shipments of precious metals and crude oil. In short: gold, drugs and chips are moving the needle hard this year – and those are industries particularly sensitive to tariff shifts, investment cycles and global supply-chain quirks.

Trade was actually a tailwind for US GDP earlier in the year. Now it’s muddying the picture. The Atlanta Fed’s early read suggested GDP might have grown at a 5.4% annualized rate in Q4, a heady number that assumed trade would keep helping. But with the deficit suddenly wider, Wall Street forecasters from some big banks are pulling back to much more modest growth estimates.

November’s numbers are a neat case study in how messy macro-policy experiments look in real time. Tariffs, import front-loading, global supply-chain adjustments and a fresh wave of corporate spending on AI infrastructure have all collided to create whipsaw trade data. Policy makers who hoped tariffs would produce a steady downward trajectory in the trade gap got something far less tidy.

If you’re trying to read the tea leaves: expect more volatility. Imports tied to AI and data centers could keep rising as companies finish projects. Pharma trade will stay jumpy as tariff and procurement decisions bounce around. And unless tariffs are either judicially curtailed or politically recalibrated, businesses will keep changing shipment timing – which means the monthly trade figures will keep surprising economists in both directions.

Bottom line: November’s surge makes one point plain – trade policy is no short-term dial to “fix” the deficit. It twists timing, rearranges flows, and introduces winners and losers. For the US economy, the real test is whether today’s capital goods imports translate into higher productivity and stronger growth tomorrow – and whether exports recover as global demand steadies.