You know how the value of the dollar reacts quickly to news about shifts in U.S. trade policy? For instance: the levying of tariffs — tariffs that President-elect Donald Trump has said he would levy, aimed at reducing our trade deficit. That deficit, in just the month of November, was $78.2 billion, according to data out Tuesday from the Department of Commerce.

That’s a $10 billion increase from November 2020, before President Joe Biden took office. And it’s $33 billion more than when Trump first took office. But this trade deficit data isn’t exactly what it appears to be.

At first glance, the enormous numbers might make you say, “Good God!” Like in March 2022, when the deficit ballooned to a record $107.7 billion. But that increase was a sign of something good, said Robert Dekle with the University of Southern California.

“All the international supply chains were screwed up with the pandemic, and then that was starting to mend around 2022, so there was this surge in global trade, and you know, especially imports into the United States,” he said.

Since then, U.S. consumers have been spending a lot on products from abroad, said Kadee Russ with the University of California, Davis.

“The economy is just really running strong … in comparison to how other countries have been doing in 2024, and so with that it seems like a very natural widening of the deficit,” she said.

A country’s trade balance is tightly related to its balance of savings and investment. And Americans are not big savers. “Nations that tend to save less and spend more will run trade deficits,” said Scott Lincicome with the Cato Institute.

And he said trade policies like tariffs play a relatively minor role in the trade deficit. Which he sees as a symptom of something else: “We’re running massive budget deficits.”

When we consider trade deficit numbers, the wonks prefer a different data point: the trade balance as a share of gross domestic product. 

“It’s not like we’re hitting new heights of the deficit when you think of it relative to GDP,” said Sam Kortum at Yale University. “Sometimes these numbers can look huge when you look at them in dollar terms. … If you look at the ratio, it kind of comes into focus.”

That focus? U.S. trade deficits haven’t fluctuated much relative to GDP during both the Trump and Biden administrations.