U.S. Goods Trade Deficit Widens in November

(Reuters) – The U.S. goods trade deficit widened more than expected in November due to a rebound in imports, complicating the outlook on whether trade will contribute to economic growth this quarter for the first time in a year.

The goods trade gap increased to a seasonally adjusted $102.9 billion last month from $98.3 billion in October, according to the Commerce Department’s Census Bureau. Economists polled by Reuters had forecast the goods deficit to reach $100.65 billion.

Exports rose by $7.4 billion, or 4.4%, to $176.4 billion, while imports climbed by $12 billion, or 4.5%, to $279.2 billion. A significant 30.1% drop in exports in the “other goods” category, paired with a 15.1% increase in imports in the same category, accounted for most of the difference.

The unexpectedly larger reduction in the trade deficit in October, where imports dropped by the most in nearly two years, had set the stage for trade potentially being a contributor to the gross domestic product (GDP) growth in the current fourth quarter. Trade last contributed to growth in the fourth quarter of 2023.

However, the latest data suggests that the margin by which goods export growth has exceeded import growth is narrowing. Additionally, businesses concerned about President-elect Donald Trump’s threats to impose higher tariffs may attempt to front-load imports before he takes office next month, potentially reversing the advantage of exports and causing trade to detract from GDP growth for a fourth consecutive quarter.

Further data on the November trade situation, including services imports and exports, is expected to be released in early January.

The U.S. economy grew at a 3.1% annualized rate in the third quarter, even as net trade subtracted 0.43 percentage points from growth. The Federal Reserve Bank of Atlanta’s GDP Now tracker indicates that fourth quarter growth is on track to match the rate of the third quarter.