In December, the U.S. trade deficit significantly increased as imports hit a record high amidst tariff uncertainties, prompting businesses to accelerate purchases of products like metals and computers. The Commerce Department report highlighted substantial deficits with key trade partners such as China, Mexico, and Canada. President Trump's administration has subjected these countries to tariffs. Trump recently postponed a 25% tariff on Mexican and Canadian goods while enforcing a 10% tariff on Chinese goods.
The surge in imports seems to stem from businesses ordering ahead of potential tariffs, indicating a persistent trend according to Thomas Ryan, an economist at Capital Economics. The trade deficit spiked to $98.4 billion, the highest since March 2022, with imports climbing to $364.9 billion, largely due to increased industrial supplies and material imports.
Exports, on the other hand, dipped by 2.6% to $266.5 billion, with a notable decline in goods exports. The goods trade deficit peaked at $123.0 billion, and the services trade also saw growth. Despite affecting GDP in recent quarters, trade had a negligible impact on the economy in the fourth quarter of 2024, which saw a 2.3% growth rate.
During the same period, the goods trade deficit with Canada expanded, while the trade gap with China widened yearly but shrank monthly. Moreover, the deficit with Mexico decreased slightly compared to November.