The U.S. trade deficit widened sharply in December as imports surged to a record high, with businesses potentially accelerating purchases ahead of tariff threats.
The Commerce Department’s report showed deficits with key trade partners, including China, Mexico, and Canada, amid tariff uncertainty.
The trade deficit rose 24.7% to $98.4 billion, the highest since March 2022, from a revised $78.9 billion in November. This marked the second-largest monthly deficit on record and the biggest increase since March 2015.
Imports climbed 3.5% to an all-time high of $364.9 billion, driven by a $10.8 billion rise in industrial supplies and materials, particularly finished metal shapes.
An additional 10% tariff on Chinese goods took effect Tuesday, while a 25% tariff on Mexican and Canadian imports remains on hold until next month.
Exports dropped 2.6% to $266.5 billion, with goods exports declining 4.2%, the sharpest fall since May 2020. Industrial supplies and consumer goods saw the largest declines. Meanwhile, the goods trade deficit hit a record $123.0 billion, widening 15.4% in inflation-adjusted terms.
The goods trade deficit with Canada increased by $2.9 billion to $7.9 billion, while the annual deficit with China rose to $295.4 billion in 2024 from $279.1 billion in 2023. The trade gap with Mexico narrowed slightly to $15.2 billion from $15.4 billion in November.
Services imports rose by $1.0 billion to a record $71.8 billion, while exports climbed to an all-time high of $96.3 billion. The trade balance had a neutral impact on U.S. GDP in the fourth quarter, with the economy expanding at a 2.3% annualized rate.
