• The trade deficit nearly doubled from October to November, shooting up to $56.8 billion after hitting its lowest level since early 2009 the previous month
• The European Union accounted for roughly one-third of the deficit increase, with the goods gap rising by $8.2 billion to $14.5 billion
• Capital goods imports surged $7.4 billion to record highs, driven by computer and semiconductor purchases tied to artificial intelligence investments

WASHINGTON, D.C. (TDR) — The American trade deficit with its global partners nearly doubled in November as the shortfall with the European Union swelled dramatically and imports of technology products hit record levels, according to data released Thursday by the U.S. Census Bureau and Bureau of Economic Analysis.

The goods and services deficit shot up to $56.8 billion, representing a staggering 94.6% increase from October’s revised figure of $29.2 billion. This marks the largest percentage change since March 1992 and far exceeded the $40.5 billion economists had forecast. The report was delayed due to the 43-day federal government shutdown that ended in mid-November when Congress agreed to a stopgap funding measure.

“The magnitude of the surge in trade deficit signals intensifying import pressure as American consumers and businesses continue shopping abroad.”

European Union Deficit Drives Widening Gap

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The dramatic swing comes just one month after October posted the smallest trade deficit since June 2009, underscoring the pronounced volatility in monthly trade flows amid President Donald Trump‘s frequently changing tariff policies.

Of the $27.6 billion increase in the overall deficit, approximately one-third came from trade with the European Union alone. The goods deficit with the EU jumped $8.2 billion to reach $14.5 billion in November, as exports to the bloc decreased by $0.4 billion while imports surged $7.7 billion.

“For the first time in recent memory, the biggest U.S. trade deficit during the first 10 months of 2025 was with the European Union—around $190 billion, compared to China’s $175 billion.”

The widening gap with Europe represents a significant shift in global trade patterns. While the deficit with China actually decreased by approximately $1 billion to $13.9 billion in November, the EU trade imbalance has emerged as a growing concern for the administration.

Tariffs Fall Short of Closing Trade Gap

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The November data presents a challenge to the administration’s assertion that tariffs would reduce America’s trade imbalances. When announcing reciprocal tariffs in April 2025, officials used trade deficit levels with various countries as a baseline for determining duty rates.

On a year-over-year basis, the deficit through November stood at $839.5 billion, roughly 4% higher than the same period in 2024. The Trump administration had celebrated October’s historic low as evidence tariff policies were working, but November’s reversal complicates that narrative.

The Tax Foundation has documented extensive tariff actions since January 2025, including 20% reciprocal tariffs on most EU products. However, economists note that tariff implementation has created significant swings in trade flows as businesses stockpile goods ahead of duty increases.

AI Investment Boom Fuels Import Surge

A primary driver of November’s import surge was the artificial intelligence investment boom. Capital goods imports soared $7.4 billion to record highs, with computers increasing by $6.6 billion and semiconductors adding $2.0 billion.

“The U.S. trade deficit widened by the most in nearly 34 years in November amid a surge in capital goods imports, likely driven by an artificial intelligence investment boom.”

Total imports jumped 5.0% to $348.9 billion. Goods imports advanced 6.6% to $272.5 billion. Consumer goods imports increased by $9.2 billion, lifted significantly by pharmaceutical preparations, which have seen large swings related to changing tariff structures throughout 2025.

Exports Tumble Amid Gold and Oil Declines

On the export side, goods shipments plunged 5.6% to $185.6 billion. Industrial supplies and materials led the decline, falling $6.1 billion due primarily to decreases in non-monetary gold, other precious metals, and crude oil exports.

“Exports tumbled 3.6% to $292.1 billion in November. Goods exports plunged 5.6% to $185.6 billion.”

Services exports provided a bright spot, reaching their highest level on record. The services surplus ticked up $0.3 billion to $30.1 billion, offering a partial offset to the goods deficit increase.

Economic Growth Forecasts Face Revision

The deterioration in November’s trade figures could prompt economists to trim their fourth-quarter GDP estimates. Trade had contributed positively to gross domestic product growth in both the second and third quarters of 2025.

The Atlanta Federal Reserve forecasts GDP increased at a 5.4% annualized rate in the fourth quarter, though estimates from Goldman Sachs are running well below 3.0%.

Global Trade Picture Remains Mixed

Beyond the EU, November’s data revealed mixed results across major trading partners. The deficit with Vietnam widened to $16.2 billion, while China’s gap increased slightly to $14.7 billion. The deficit with Mexico narrowed marginally to $17.8 billion. The United States maintained trade surpluses with Switzerland at $7.8 billion and the United Kingdom at $4.2 billion.

Will November’s massive trade deficit reversal force the administration to reconsider its tariff approach, or will officials point to longer-term trends as evidence their policies are working?

Sources

This report was compiled using information from the official Bureau of Economic Analysis release on November 2025 trade data, U.S. Census Bureau foreign trade statistics, reporting by Reuters via Yahoo Finance, analysis from TradingView, Trading Economics historical data, Foreign Policy analysis on EU trade, Tax Foundation tariff tracking, White House trade statements, ING analysis on EU tariff impacts, Military.com reporting on the government shutdown, and Conference Board economic forecasts.

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