Fool's gold: The U.S. trade deficit isn't actually falling due to tariffs. It's still near a record high.

By Jeffry Bartash

U.S. still has an insatiable appetite for imports

U.S. trade deficits are still sky high despite stiff tariffs on foreign goods.

The numbers: The trade deficit fell a few months ago to a 16-year low, but it was fool's gold. The U.S. is still running a trade gap near historically high levels.

In November, the deficit almost doubled to $56.8 billion from just $29.2 billion in October.

The October deficit was the lowest since 2009 and was almost entirely the result of disrupted trade patterns tied to higher U.S. tariffs imposed by the Trump administration.

Deficits soared earlier in 2025 as companies rushed to import before tariffs took effect. Imports tumbled late last year after companies had built large stockpiles to get through the worst of the tariffs.

Adding to the big drop in the deficit in October was a flood of gold exports, reversing a big inflow of gold earlier in the year.

Gold-market dealers brought brickloads of gold - literally - into the U.S. when it looked like the Trump tariffs would eventually apply to imports of the precious metal.

Once the White House clarified gold would not be subject to tariffs, dealers sent the metal back to their original locations, mostly in Switzerland.

If the tariffs and gold flow are factored out, U.S. trade deficits are still running near record levels despite efforts by the Trump administration.

The U.S. trade deficit totaled $839.5 billion through the first 11 months of 2025, compared with $806.5 billion in the same period in 2024.

For all of 20215, the U.S. is on track to post the second- or third-largest trade deficit ever.

While tariffs have shrunk massive imports from China, the U.S. is importing more goods than ever from Mexico and Vietnam.

Key details: U.S. imports rose 5% in November to $349 billion, the highest level in four months.

Some of the increase in imports is tied to spending on technologies produced overseas, such as computer chips, which are used in artificial intelligence.

Exports, on the other hand, fell 3.6% in November to $292 billion. Drugs and consumer goods both showed sharp declines.

Big picture: The trade deficit in the 2025 fourth quarter is likely to be the smallest of the year, boosting gross domestic product. Lower deficits add to GDP.

The gold flows are not factored into GDP, however, so the benefits of a lower trade gap might not be as sizable as they seemed a month ago.

Putting trade aside, the U.S. is still growing faster than expected. The economy is poised to show more strength in 2026.

Looking ahead: "Tariffs and a cheaper currency are helping to contain the still-large U.S. trade deficit, but the country still needs to buy much of the equipment required to build the AI infrastructure," said senior economist Sal Guatieri of BMO Capital Markets.

Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX rose in Thursday trading.

-Jeffry Bartash

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

01-29-26 1007ET