Trade deficit floods into the red

January 29, 2026

The US trade deficit expanded 94.6% in November to $56.8 billion. The deficit in dollar terms increased $27.6 billion from October, the second largest monthly increase on record behind January 2025. That reversed the improvement in the deficit from three months prior. Imports increased 5.0%, while exports declined 3.6%.

We adjust the headline change in the deficit for the purposes of the GDP calculation. Exports of nonmonetary (for investment purposes) gold contributed -$4.2 billion of the total -$11.1 billion decline in exports. On the import side, nonmonetary gold also declined, falling $606 million.  After taking out gold, the trade deficit expanded $24 billion, or 32.6%. That is less than the headline suggests. The goods deficit increased 47.3% before adjusting for inflation, but 36.9% after adjusting for inflation.

The composition of the trade change was mixed by trading partner and revealed surprising underlying detail. The main drivers of the larger deficit included Europe, the Pacific Rim and South Asia (namely, India); in Europe, the primary driver was likely the jump in pharmaceutical imports. However, in the Pacific Rim, we saw diverse drivers, including South Korea, Malaysia, the Philippines and Singapore. Trade deficits with some of our larger partners like China, Taiwan and Vietnam narrowed. Deficits with our nearest trading partners including Canada, Mexico and South/Central America were essentially flat.

Imports increased approximately $16 billion after adjusting for nonmonetary gold. A main driver was an enormous $6.7 billion jump in pharmaceutical preparations, reversing October's trend. That sector was incredibly volatile in 2025. Capital goods continued to increase to feed insatiable AI demand and reflect carve-outs in the new tariffs. Capital goods increased $7.4 billion in November, led by computers and semiconductors. Other goods rose $1.9 billion, while consumer goods ex-pharma and food-related imports posted modest gains.

We saw offsetting weakness in other import categories. Crude oil and other fuels declined, along with copper. Imports of automotives declined, led by finished trucks and passenger cars. Services imports were essentially flat (-$0.1 billion), as increases in business services were offset by declines in travel.

Exports declined $6.9 billion outside of nonmonetary gold, reflecting underlying weakness that has been obscured by the gold trend. Exports of consumer goods declined $3.1 billion; $2.9 billion of that decline was pharma exports, but there were other broad-based losses. Exports of industrial supplies ex-gold declined $1.9 billion, mainly on precious metals and crude oil. Exports of refined petroleum products and natural gas increased. Passenger cars, trucks and auto parts all fell, posting a $762 million loss combined, while agricultural exports continued to lose ground, led by soy and corn.

Among exports, only exports of capital goods and services increased. Capital goods increased $712 million, which was more than accounted for by computers and computer accessories. Exports of services increased $0.2 billion, mainly on travel, business services and intellectual property.