US trade deficit widens in November as imports jump

The US trade gap widened in November according to government data released on Tuesday, as imports rose faster than exports ahead of President-elect Donald Trump’s return to the White House.

With Trump set to take office later this month, trade imbalances in the world’s biggest economy could again come under the spotlight.

In his first term, Trump engaged in a tit-for-tat tariffs war with China, the world’s second biggest economy − with an eye on shrinking the trade gap between both countries.

In November, the US trade deficit rose 6.2 per cent to $78.2 billion, said the Commerce Department on Tuesday.

This was slightly more than the $77.9 billion figure expected by a Briefing.com consensus forecast, and marked a widening from October’s revised $73.6 billion figure.

Imports grew 3.4 per cent to $351.6 billion, driven by goods shipments with increases seen in areas ranging from industrial supplies to semiconductors and passenger cars.

US exports, meanwhile, also rose by 2.7 per cent to $273.4 billion in November, said the report.

Exports of industrial supplies such as crude oil and other petroleum products picked up, alongside those of autos and pharmaceutical preparations.

Among countries and regions, the US goods deficit with China stood at $25.4 billion, while that with the European Union was $20.5 billion in November, said the Commerce Department.

Strong growth seen in domestic spending indicators should carry through to fourth quarter gross domestic product results, said Carl Weinberg and Mary Chen of High Frequency Economics in a note.

“Everyone should revise their estimate for fourth quarter GDP growth higher after this report,” they said.

While “there is scant evidence in this report that companies are actually accelerating imports to beat Trump Day One import threats,” the analysts cautioned that the president-elect has threatened new tariffs.

“We might expect an uptick in imports from Canada, Mexico and China in the next round of data for December,” the analysts said.

Looking ahead, importers are likely eyeing negotiations involving a US dockworkers’ union as they try to reach agreement on a new labour contract with their employer group before a January 15 deadline.

If both sides cannot reach a deal, there could be a new workers’ strike − threatening supply chains.

Meanwhile, Canada recorded a ninth consecutive monthly trade deficit in November, albeit smaller than expected as exports rose faster than imports, data showed on Tuesday.

Total exports rose 2.2% in November, helped by gains in a broad section of product categories, while imports were up 1.8%, led by consumer goods and chemical, plastic and rubber products, Statistics Canada said.

As a result, Canada’s trade deficit narrowed to C$323 million ($225.6 million) from a revised C$544 million deficit in October. Analysts polled by Reuters had expected a C$900 million deficit in November.

The trade surplus with the United States, by far Canada’s largest trading partner, widened to C$8.2 billion from C$6.6 billion in October.

The surplus with the US nearly offset Canada’s trade deficit with all other countries - which widened to C$8.5 billion in November from C$7.2 billion - underscoring the potential impact of the US President-elect’s threat to impose tariffs on Canadian goods.

The Canadian dollar slightly weakened after the trade data with the currency trading up 0.13% to 1.4311 against the US dollar, or 69.88 US cents.

The rise in total exports was led by a second consecutive monthly increase in consumer goods, mainly due to large shipments of medicaments sent to the United States. Miscellaneous goods and supplies also contributed, mainly because of higher exports of battery packs for electric vehicles to the United States, Statscan said.

Overall, nine of 11 export product sections rose in the month.

The largest contributors to the monthly increase in imports were consumer goods, basic and industrial chemical, plastic and rubber products, and industrial machinery, equipment and parts.

Due to implementation of new software at the Canada Border Services Agency, trade data for October and November include a greater degree of estimation. Trade values were also impacted by the depreciation of the Canadian dollar in those months.

Agencies