The United States trade deficit experienced a substantial increase in December, as imports reached unprecedented levels due to ongoing tariff threats against several major trading partners. According to a report by Reuters, the trade gap surged by 24.7%, arriving at $98.4 billion, marking the highest figure since March 2022.

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The Commerce Department’s Bureau of Economic Analysis revealed that this increase was up from a revised $78.9 billion in November. This spike exceeded economists’ predictions, who had estimated the trade deficit to climb to $96.6 billion, as opposed to the originally reported $78.2 billion in November.

Contributing to this significant uptick, President Donald Trump’s recent decision to delay a 25% tariff on Mexican and Canadian goods until the following month had notable implications. Additionally, a new 10% levy on Chinese imports was enacted on Tuesday, as part of efforts by the White House to address immigration issues and curb the influx of illicit drugs such as fentanyl.

IndexBox data indicates that December’s imports rose by 3.5% to a historic peak of $364.9 billion, while exports diminished by 2.6%, totaling $266.5 billion. Despite these developments on the trade front, the government’s advance GDP estimate for the fourth quarter reported a neutral impact of trade on GDP, a stark change following three quarters where trade had negatively influenced growth. The economy grew at a 2.3% annualized rate, primarily hindered by inventory levels, compared to a 3.1% growth pace in the previous quarter.

As the trade dynamics evolve, stakeholders closely watch governmental policies and international economic relationships, which continue to shape the U.S. economic landscape.

Source: IndexBox Market Intelligence Platform