• Trade deficit nearly doubled from October to November marking largest percentage increase since 1992
• Capital goods imports surged $7.4 billion driven by artificial intelligence investment boom
• European Union imports jumped $8.2 billion accounting for third of deficit increase

WASHINGTON (TDR) — The United States trade deficit widened by 94.6% in November to $56.8 billion, marking the most dramatic monthly increase in nearly 34 years despite President Donald Trump‘s aggressive tariff policies designed to narrow the gap, according to data released Thursday by the U.S. Census Bureau and Bureau of Economic Analysis.

The November deficit represents a stunning reversal from October’s $29.2 billion gap, which had been the smallest since 2009. Economists polled by Reuters had forecast the deficit would rise to $40.5 billion, making the actual figure significantly worse than expected. The percentage increase was the largest since March 1992, underscoring the volatile trade flows created by the Trump administration’s fluctuating tariff stance.

AI Investment Boom Drives Record Capital Goods Imports

The November surge was driven primarily by a dramatic increase in capital goods imports, which soared $7.4 billion to a record high. Goods imports overall advanced 6.6% to $272.5 billion, boosted by strong gains in computers and semiconductors that economists attribute to an artificial intelligence investment boom sweeping through American tech companies.

“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, which could prompt economists to trim their economic growth estimates for the fourth quarter,” according to the Reuters analysis.

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Major technology companies including Amazon, Google, Meta, and Microsoft are collectively investing approximately $400 billion in AI-related capital expenditures in 2025 alone. This massive spending spree has required substantial imports of advanced computing equipment, semiconductors, and telecommunications technology from Asia and Europe.

Total imports jumped 5% to $348.9 billion in November, while exports declined 3.6% to $292.1 billion. The goods trade deficit alone widened 47.3% to $86.9 billion, partially offset by a services surplus that increased slightly to $30.1 billion.

European Union Accounts For Third Of Deficit Increase

The deficit with the European Union increased $8.2 billion to $14.5 billion in November, accounting for roughly one-third of the total deficit increase. Exports to the EU decreased $400 million to $34.3 billion while imports surged $7.7 billion to $48.8 billion.

“Goods imported from the European Union accounted for $8.2 billion and a third of the increased trade deficit in November,” the Census Bureau reported.

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The surge in European imports came despite the Trump administration’s August agreement to impose a 15% tariff on most EU goods to stabilize relations between the trade partners. That agreement was briefly threatened when President Trump said he would impose 100% tariffs on European nations opposing U.S. annexation of Greenland, though he later walked back those comments.

The balance with Singapore shifted dramatically from a $1.8 billion surplus in October to a $1.1 billion deficit in November. Exports decreased $100 million to $3.7 billion while imports increased $2.8 billion to $4.8 billion.

China Deficit Narrows But Asian Gap Expands

While the U.S. trade deficit with China decreased $1 billion to $14.7 billion in November, the overall trade deficit with Asia grew to $70.8 billion. The shrinking China deficit was more than offset by growth in Southeast Asian imports, suggesting possible trade diversion as companies route goods through third countries to avoid Chinese tariffs.

“The U.S. trade deficit with Asia in goods and services grew to $70.8 billion in November, new Commerce Department data shows, as a shrinking deficit with China was offset by growth in Southeast Asian imports despite the Trump administration’s attempts to rebalance trade,” according to Nikkei Asia.

The United States also recorded deficits with Mexico ($17.8 billion), Vietnam ($16.2 billion), Taiwan ($15.6 billion), Germany ($7.4 billion), Japan ($4.7 billion), India ($4.4 billion), South Korea ($3.7 billion), France ($3.6 billion), and Canada ($3.5 billion). Surpluses were recorded with Switzerland ($7.8 billion), Netherlands ($5.6 billion), South and Central America ($5.1 billion), and United Kingdom ($4.2 billion).

Economists Warn Of GDP Impact And Fundamental Contradictions

The deterioration in November’s trade deficit could temper economists’ expectations for fourth-quarter gross domestic product growth. Trade had contributed positively to GDP growth in the second and third quarters of 2025. The Atlanta Federal Reserve is forecasting GDP increased at a 5.4% annualized rate in the fourth quarter, though estimates from major Wall Street banks including Goldman Sachs are running well below a 3% pace.

“The deterioration in the trade deficit in November could temper economists’ expectations that trade will deliver another large boost to gross domestic product in the fourth quarter,” the Reuters report noted.

Economic analysts point to fundamental contradictions in the Trump administration’s trade strategy. The American Enterprise Institute notes that trade deficits fundamentally reflect the gap between national savings and domestic investment rather than unfair foreign trade practices.

“The fundamental reason why the United States has been running trade deficits on a consistent basis has been that, as a country, we spend more than we produce. Or equivalently, as John Maynard Keynes taught us, our repeated trade deficits reflect the fact that we continuously save less than we invest,” according to AEI analysis.

The administration’s simultaneous pursuit of increased foreign investment in the United States and trade deficit reduction creates an inherent contradiction, economists argue. To the extent Trump succeeds in attracting foreign capital through trade deals, those capital inflows will by definition maintain trade deficits in a floating exchange rate system.

Year-To-Date Deficit Up 4% Despite Tariff Wall

For the year through November, the nation’s cumulative trade deficit reached $839.5 billion, representing a 4.1% increase from the same period in 2024. Exports increased $185.7 billion or 6.3% year-to-date, while imports increased $218.6 billion or 5.8%.

The three-month average goods and services deficit increased $400 million to $44.7 billion for the period ending in November, though year-over-year the average deficit decreased $33.8 billion from the three months ending in November 2024.

“For the year, the nation’s cumulative trade deficit through November was $839.5 billion, which is a 4% increase from a year earlier,” according to UPI.

The data release was delayed due to the 43-day government shutdown that ended in November 2025. The Census Bureau and Bureau of Economic Analysis are still working to update their schedules of economic releases following the disruption.

Export Declines Led By Industrial Materials And Pharmaceuticals

November exports declined across multiple categories. Industrial supplies and materials decreased $6.1 billion, with nonmonetary gold down $4.2 billion and other precious metals down $2.6 billion. Crude oil exports fell $1.4 billion.

Consumer goods exports decreased $3.1 billion, led by a $2.9 billion decline in pharmaceutical preparations. Other goods exports fell $1.3 billion. Services exports increased $200 million to $106.4 billion, the highest on record.

The import surge was led by pharmaceutical preparations, which jumped $6.7 billion after a significant drop in October. Computer imports increased $6.6 billion. Capital goods soared as companies stocked up on equipment needed for AI infrastructure buildout.

Will the AI investment boom continue to offset tariff impacts in 2026, or has the trade deficit surge exposed fundamental flaws in protectionist economic policy?

Sources

This report was compiled using information from the U.S. Census Bureau and Bureau of Economic Analysis joint release, Reuters reporting on the trade deficit, UPI’s coverage of the data, analysis by Nikkei Asia on Asian trade patterns, Trading Economics data compilation, the White House executive order on tariffs, American Enterprise Institute analysis, Penn Wharton Budget Model research, J.P. Morgan Global Research coverage, Time Magazine reporting on tariff impacts, and The D&O Diary analysis of AI investment effects.

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