US goods trade deficit widens sharply in December on imports

The U.S. trade deficit in goods widened sharply in December, likely as businesses front-loaded imports in anticipation of broad tariffs from President Donald Trump's new administration.

The goods trade gap increased 18.0% to $122.1 billion last month, the Commerce Department's Census Bureau said on Wednesday. Goods imports surged $10.8 billion to $289.6 billion, while exports fell $7.8 billion to $167.5 billion.

Trump has promised to impose or massively raise tariffs on imported goods, including from China, Canada and Mexico.

The widening in the goods deficit suggested that trade probably remained a drag on gross domestic product in the fourth quarter. Trade has subtracted from GDP for three straight quarters. The government is scheduled to publish its advance estimate of fourth-quarter GDP on Thursday.

A Reuters survey of economists forecast GDP rising at a 2.6% annualized rate last quarter.

The economy grew at a 3.1% pace in the July-September quarter. It is expanding well above the 1.8% that Federal Reserve officials regard as the non-inflationary growth pace. 

The U.S. central bank is expected to leave its benchmark overnight interest rate in the 4.25%-4.50% range at the end of a two-day policy meeting on Wednesday, having reduced it by 100 basis points since September. The policy rate was hiked by 5.25 percentage points in 2022 and 2023 to tame high inflation.