October Trade Deficit Doubles to $56.8 Billion; Rebound in Imports Ends Brief Narrowing Trend

By AI Insights

2026-02-04

According to the latest released data, the U.S. goods and services trade deficit expanded to $56.825 billion in October, a substantial increase of nearly 94% compared to $29.35 billion in September. The previous month's deficit had hit a recent low due to a surge in specific exports or deferred imports, but the October data shows trade flows rapidly "normalizing." Although the scale of the deficit did not reach the extreme level of over $100 billion seen earlier this year, the single-month increase was astonishing, indicating that U.S. domestic demand's reliance on imported goods remains strong.

Observing the breakdown of performance, the main reason for the widening deficit was the rebound in import momentum and the weakness in exports. Market analysis points out that as the year-end holiday shopping peak approaches, retailers rebuilding inventories pushed up demand for consumer goods imports; meanwhile, the U.S. dollar trended weak in the second half of 2025. Although theoretically beneficial for exports, uneven global economic growth and uncertainty regarding tariff barriers continued to limit the strength of U.S. export expansion, leading to a widening trade gap once again.

Regarding institutional views, Advisor Perspectives analysts pointed out that the doubling of the deficit reflects the high volatility of trade data, specifically that the September figure may have been a short-term deviation. In addition, reports from Deloitte and J.P. Morgan both mentioned that full-year trade activity in 2025 has been deeply affected by the psychological expectations of tariff policies. The "front-loading" rush at the beginning of the year had caused the deficit to surge, while recent fluctuations represent the supply chain's ongoing adjustment under policy uncertainty.

Looking ahead, in the short term, the deficit in November and December is expected to fluctuate within the $60-80 billion range under seasonal factors. In the medium term, as details of the 2026 tariff policy become clearer, coupled with the impact of the Federal Reserve's (Fed) possible interest rate path on the dollar exchange rate, the import/export structure may face a new round of adjustment. If tariff rates remain high, importers may accelerate their search for alternative supply chains, which will become the biggest variable in trade data over the next six months.

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