U.S. Trade Deficit Widened by Record Amount in December

The U.S. trade deficit in goods and services (BOP basis) widened to $98.4 billion in December from a slightly upwardly revised $78.9 billion in November (previously $78.2 billion), according to the U.S. Census Bureau. A $96.3 billion deficit was expected by the Action Economics Forecast Survey. This was the largest monthly increase on record for the deficit and the second largest overall deficit. While the monthly shortfall was large, it was in line with the advance report and the deficit assumed by the BEA in the first estimate of 2024 Q4 GDP. So, today’s report is unlikely to have any impact on subsequent revisions. Exports fell 2.6% m/m in December, nearly offsetting a 2.7% monthly gain in November. By contrast, imports rose 3.5% m/m in December, the same monthly gain as in November, in part reflecting attempts by importers to stock up on products ahead of expected tariff increases.

The deficit in goods trade (BOP basis) widened to $123.0 billion in December from an upwardly revised $104.1 billion in November (previously $103.4 billion). Goods exports (customs value) fell 3.8% m/m (-0.8% y/y) in December, reversing a 3.3% monthly gain in November. The December decline was widespread with no major end-use category reporting a monthly increase. Exports of nonfood consumer goods ex autos slumped 8.5% m/m in December after a 7.8% m/m rise in November. Auto exports fell 6.7% following a 15.6% monthly jump in November. Industrial supplies exports declined 3.0% m/m, their third monthly decline in the past four months. And capital goods exports fell 2.6% m/m, also their third decline in the past four months.

Imports of goods gained 4.0% m/m (+12.8% y/y) in December on top of a 4.3% monthly increase in November. Changes varied across end-use categories with a 19.0% m/m surge in imports of industrial supplies and materials accounting for almost all of the overall monthly increase. This surge mainly reflected a $9.8 billion jump (84.2% m/m) in imports of primary metal products. Apart from industrial supplies imports, the remaining imports only edged up 0.2% m/m in December. Imports of petroleum products increased 4.4% m/m in December on top of a 6.2% monthly gain in November. Nonpetroleum imports rose 4.0% m/m in December following a 4.2% monthly increase in November.

The services trade surplus narrowed to $24.5 billion in December from $25.1 billion in November (previously $25.2 billion). Service exports edged up 0.5% m/m in December versus a 1.0% m/m rise in November. Monthly gains in service exports were relatively widely spread led by a 1.6% m/m rise in exported construction services and a 1.4% m/m increase in exported travel services. Service imports rose 1.4% m/m in December following a 0.3% m/m gain in November. Monthly gains in service imports were also relatively widespread, led by a 5.0% m/m increase in imported maintenance services, a 3.8% m/m rise in imported transport services, a 2.0% m/m rise in imported travel services, and 1.0% m/m gain in charges for use of intellectual property.

The inflation-adjusted goods trade deficit (customs value) widened to $111.9 billion in December from $97.0 billion in November (previously $96.5 billion). Real exports fell 3.7% m/m while real imports rose 3.9 m/m.

The U.S. goods trade deficit with China narrowed slightly to a seasonally adjusted $25.3 billion in December from $25.6 billion in November (previously $25.4 billion). Exports to China jumped 9.3% m/m while imports increased 1.9% m/m. The deficit with the European Union narrowed slightly to $20.4 billion in December from $20.6 billion in November, while the deficit with Japan widened to $5.5 billion from $5.3 billion.

The international trade data, including relevant data on oil prices, can be found in Haver’s USECON database. Detailed figures on international trade are available in the USINT and USTRADE databases. The expectations figures are from the Action Economics Forecast Survey in AS1REPNA.