The U.S. trade deficit widened sharply in November, highlighting the uneven and often contradictory effects of President Donald Trump’s tariff-driven trade strategy as it continues to work its way through the economy.

According to data released Thursday by the Census Bureau, the overall trade shortfall jumped to $56.8 billion in November, a 94.6% increase from October. The surge marked a dramatic reversal from the previous month, when the deficit had fallen to its lowest level since early 2009, raising fresh questions about the durability of recent improvements in America’s external balance.

A substantial portion of the deterioration was linked to trade with Europe. Roughly one-third of the month-on-month increase came from the European Union, where the U.S. goods deficit widened by $8.2 billion. That rise suggests that transatlantic trade flows remain robust despite the imposition of tariffs and months of tense negotiations between Washington and Brussels.

By contrast, the deficit with China narrowed modestly, declining by about $1 billion to $13.9 billion. The smaller gap with Beijing reflects a combination of factors, including lingering tariff barriers, weaker Chinese domestic demand, and ongoing efforts by U.S. companies to diversify supply chains away from China toward other parts of Asia and Europe.

While tariffs have clearly dampened some bilateral trade, they have not eliminated America’s overall imbalance, instead redistributing it across trading partners.

On a cumulative basis, the U.S. trade deficit through November reached $839.5 billion, around 4% higher than the same period in 2024. The year-over-year increase underscores how difficult it has been to achieve a sustained reduction in the deficit, even as trade policy has become more interventionist.

The November data sit uneasily with the administration’s stated objectives. When Trump announced so-called reciprocal tariffs in April 2025, the White House pointed to bilateral trade deficits as evidence of unfair trading relationships and used those imbalances as a benchmark for determining duty levels. The logic was straightforward: higher tariffs would curb imports, encourage domestic production, and ultimately shrink the deficit.

In practice, the outcome has been far more complex. While tariffs have altered sourcing decisions and raised costs for foreign suppliers, they have also increased input prices for U.S. manufacturers and consumers, in some cases shifting demand rather than suppressing it. Strong domestic consumption, in particular, continues to underpin import growth, limiting the impact of tariffs on the headline deficit.

The widening gap with the EU illustrates this dynamic. Europe exports a large volume of high-value goods to the United States, including machinery, pharmaceuticals, vehicles, and industrial equipment, categories where American demand is relatively resilient. Even with higher tariffs, these imports have remained competitive, contributing to the November surge in the deficit.

Recognizing the economic and political costs of prolonged trade confrontation, the White House softened its stance as the year progressed. In August, the U.S. and the EU reached a framework agreement that set tariffs at 15% on most European goods and aimed to stabilize relations after months of uncertainty. The deal reduced the risk of further escalation and provided businesses with greater clarity, though it stopped short of fundamentally reshaping trade balances.

Economists have noted that trade deficits are shaped by forces that tariffs alone cannot easily offset. Currency movements, relative growth rates, fiscal policy, and consumer behavior all play critical roles. A large fiscal deficit and strong consumer spending tend to pull in imports, widening the trade gap regardless of tariff levels. At the same time, boosting exports often requires sustained investment in competitiveness, infrastructure, and productivity, not just barriers to imports.

The November figures also highlight a broader tension in U.S. trade policy: efforts to rebalance trade through tariffs can conflict with the realities of a consumption-driven economy. As long as U.S. households and businesses continue to spend at a healthy pace, imports are likely to remain elevated, and deficits may fluctuate rather than steadily decline.

Against this backdrop, the latest data suggest that while Trump’s tariffs have reshaped trade patterns and bargaining dynamics, they have not delivered a clear or lasting reduction in the overall deficit. Instead, they have produced sharp month-to-month swings and shifted imbalances among trading partners, leaving the longer-term challenge of external rebalancing unresolved.

Tesla delivered a mixed set of fourth-quarter results that once again captured the tension at the heart of the company, which has recorded a downward spiral of revenue in the past several quarters.

The EV giant’s latest earnings offered investors a familiar contradiction: short-term financial outperformance paired with deeper signs of strain in the company’s core business, even as Elon Musk presses ahead with a costly and uncertain pivot toward artificial intelligence, autonomy, and robotics.

Tesla reported better-than-expected fourth-quarter results after the bell on Wednesday, lifting its stock about 2% in extended trading. Adjusted earnings came in at 50 cents per share, ahead of the 45 cents expected by analysts surveyed by LSEG, while revenue of $24.90 billion narrowly topped forecasts. But the relief rally masked a more consequential development. Tesla’s full-year revenue fell 3% to $94.8 billion from $97.7 billion in 2024, marking the first annual revenue decline in the company’s history.

That milestone underscores how sharply Tesla’s growth story has changed. Once defined by rapid expansion and soaring deliveries, the company is now grappling with slowing sales, intensifying competition, and a lineup that has aged as rivals push newer, cheaper models into the market. Nowhere is that pressure more visible than in China, where BYD and other domestic manufacturers have steadily eroded Tesla’s market share through aggressive pricing and frequent product refreshes.

In the fourth quarter alone, Tesla’s revenue slipped 3% from a year earlier, while automotive revenue fell a steeper 11% to $17.7 billion, down from $19.8 billion. Earlier this month, the company disclosed that vehicle deliveries plunged 16% in the quarter and declined 8.6% for the full year.

Although Tesla does not precisely define deliveries in its shareholder communications, the figure is widely treated as the closest proxy for sales, and the trend highlights the depth of the slowdown.

Management attributed the annual revenue decline partly to lower vehicle deliveries and reduced regulatory credit revenue, a reminder that Tesla has long relied on those credits to bolster earnings. The fading contribution from credits comes at a time when price cuts, used to defend market share, have already weighed on margins.

Profitability pressures were stark. Net income in the fourth quarter fell 61% to $840 million, or 24 cents per share, from $2.1 billion, or 60 cents per share, a year earlier. Operating expenses jumped 39%, driven largely by spending on artificial intelligence and other research and development projects. Those investments sit at the heart of Musk’s long-term vision, but they are also dragging on near-term earnings at a moment when revenue growth has stalled.

Tesla’s challenges in 2025 have not been purely commercial. Some of the downturn has been linked to Musk’s political posture, including his close work with President Donald Trump and a series of incendiary public statements and endorsements of far-right figures in Europe. That rhetoric triggered a consumer backlash in several markets, particularly among buyers who once associated Tesla with environmentalism and progressive values. The backlash persisted through the year, compounding the impact of competition and macroeconomic pressures.

During the earnings call, Musk acknowledged another structural issue: Tesla’s aging product lineup. He said the company would end production of the Model S and Model X vehicles first introduced in 2012 and 2015, respectively. While the move streamlines operations, it also highlights how heavily Tesla has leaned on incremental updates to a small number of models while competitors have cycled through new designs more rapidly.

Yet Musk made clear that he wants investors to focus less on cars and more on what he describes as Tesla’s future as an AI company.

“We’re really moving into a future that is based on autonomy,” he said, warning that the shift would require heavy capital spending.

Chief Financial Officer Vaibhav Taneja said Tesla expects about $20 billion in capital expenditures this year, spanning new factories, AI computing infrastructure, and the development of Optimus humanoid robots.

That strategic pivot is already reshaping Tesla’s operations. Musk said the Fremont, California, factory lines that once produced the Model S and X will be converted to manufacture Optimus robots. Tesla plans to unveil the third generation of Optimus later this quarter, describing it as its first design intended for mass production. The company has pitched Optimus as a bipedal, intelligent robot capable of tasks ranging from factory work to childcare, a vision that, if realized, would open markets far beyond automobiles.

Autonomy remains the other pillar of Tesla’s long-term bet. In 2025, the company launched a Robotaxi-branded ride-hailing app and began operating a pilot service in Austin, Texas. Last week, executives said they had removed human safety supervisors from a handful of vehicles in that fleet to conduct fully driverless passenger rides. Tesla said it plans to expand robotaxi coverage to seven additional U.S. cities in the first half of this year, including Dallas, Houston, Phoenix, Miami, Orlando, Tampa, and Las Vegas.

The company has also begun tooling ahead of production of its Cybercab, a two-seat, purpose-built autonomous vehicle designed without a steering wheel or pedals. The Cybercab is intended to be the backbone of Tesla’s robotaxi ambitions, but regulatory approval and large-scale deployment remain unresolved. Musk has spent nearly a decade forecasting imminent breakthroughs in Full Self-Driving, and investors are increasingly pressing for firm timelines rather than aspirational targets.

While the automotive business struggles, other segments are providing some support. Revenue from Tesla’s energy generation and storage business rose 25% to $3.84 billion, driven by strong demand for grid-scale batteries used to stabilize power networks and support renewable energy. The services and other segments also grew, with revenue up 18% to $3.37 billion. Though smaller than the auto unit, these businesses offer diversification and exposure to longer-term infrastructure trends.

One of the most closely watched disclosures was Tesla’s confirmation that it agreed on Jan. 16 to invest about $2 billion in Musk’s artificial intelligence startup, xAI. The investment followed xAI’s recent $20 billion fundraising round, which exceeded its initial target and included Nvidia and Cisco as participants. Tesla said the deal, along with a broader partnership, is intended to enhance its ability to develop and deploy AI products and services “into the physical world at scale.”

The xAI investment is believed to strengthen Tesla’s autonomy and robotics roadmap by tightening integration with a dedicated AI research company. Also, it deepens concerns about capital allocation and governance, further entangling Tesla’s finances with Musk’s wider network of ventures at a time when its core business is under strain.

In essence, Tesla’s latest results capture a company at a crossroads. It highlights that the era of easy growth driven by electric vehicle adoption alone appears to be over. In its place, Musk is asking investors to accept slowing sales, declining profits, and rising spending in exchange for a future built on artificial intelligence, robotaxis, and humanoid robots.

Meta delivered a stronger-than-expected fourth-quarter performance on Wednesday, beating Wall Street estimates on both earnings and revenue and issuing an upbeat sales outlook that sent its shares jumping as much as 10% in after-hours trading.

The results capped a year in which the social media giant tightened its grip on the global digital advertising market while accelerating an aggressive and costly push into artificial intelligence, a strategy CEO Mark Zuckerberg has framed as existential to the company’s long-term relevance.

For the fourth quarter, Meta posted earnings per share of $8.88, well above the $8.23 forecast by analysts surveyed by LSEG. Revenue came in at $59.89 billion, topping expectations of $58.59 billion and marking a 24% increase from a year earlier.

The company’s guidance for the current quarter further buoyed sentiment. Meta said it expects first-quarter revenue to range between $53.5 billion and $56.5 billion, comfortably ahead of the $51.41 billion analysts had penciled in. Finance chief Susan Li said the outlook was driven by “strong demand that we saw through the end of Q4 and continuing into the start of 2026,” signaling that advertisers remain willing to spend heavily across Meta’s platforms.

Advertising once again did the heavy lifting. The company said ad revenue reached $58.1 billion in the quarter, accounting for nearly 97% of total sales. Meta’s scale remains unrivalled in the sector, with daily active people across its family of apps — including Facebook, Instagram, and WhatsApp — hitting 3.58 billion, in line with Wall Street estimates and underscoring the breadth of its global reach.

Behind the headline numbers, however, investors were also focused on Meta’s spending trajectory, particularly as it pours capital into AI infrastructure at a pace few rivals can match. The company said it expects total expenses in 2026 to land between $162 billion and $169 billion, a figure that reflects both rising operating costs and heavy capital investment.

Capital expenditures tied to AI are forecast to reach between $115 billion and $135 billion in 2026, well above analyst expectations of $110.7 billion and almost double the $72.2 billion Meta spent on capex in 2025. The company said the surge is driven by “increased investment to support our Meta Superintelligence Labs efforts and core business,” a reference to its ambition to build and train frontier AI models at scale.

Zuckerberg told analysts that Meta will begin releasing its latest generation of AI models in the coming months. While he cautioned that the first releases may not immediately redefine the market, he emphasized the pace of progress. He said he expects Meta to demonstrate a “rapid trajectory” and to “steadily push the frontier over the course of the year” as new models are rolled out.

That push follows a sweeping overhaul of Meta’s AI organization in 2025. The company invested $14.3 billion in Scale AI as part of a broader effort to recruit its founder, Alexandr Wang, and key members of his team. Wang now oversees Meta’s top-tier unit, internally known as TBD, which is tasked with developing the company’s most advanced AI systems.

The restructuring came after Meta’s Llama 4 model received a muted response from developers last spring, raising questions about the company’s ability to keep pace with rivals. Meta has since been testing a new frontier model and Llama successor, code-named Avocado, which it plans to release in the first half of the year, according to CNBC.

While Meta’s core advertising engine is firing on all cylinders, its metaverse ambitions continue to weigh heavily on the bottom line. The Reality Labs division posted an operating loss of $6.02 billion in the quarter on revenue of $955 million, worse than the $5.67 billion loss analysts had expected. Since late 2020, Reality Labs has accumulated nearly $80 billion in operating losses.

Earlier this month, Meta laid off more than 1,000 employees in Reality Labs, including staff working on virtual reality studios, as it reallocated resources toward AI and wearable devices such as its Ray-Ban Meta smart glasses. Although Meta’s chief technology officer, Andrew Bosworth, has insisted the company is not abandoning VR, the pullback has unsettled parts of the developer community and fueled concerns about a prolonged slowdown in the sector.

Meta said it expects Reality Labs’ operating losses in 2026 to remain broadly in line with the previous year. Zuckerberg suggested the worst may be nearing an end, telling analysts that he expects this year to mark the peak of the unit’s losses, followed by a gradual improvement.

The company also flagged mounting regulatory and legal risks. Meta warned that ongoing scrutiny in the European Union and the United States could “significantly impact our business and financial results,” noting that several high-profile social media trials set to begin this year could result in material losses.

However, investors appear focused on the company’s near-term momentum for now. Strong ad demand, resilient user engagement, and an ambitious — if expensive — AI roadmap have helped Meta reassert itself as one of the technology sector’s dominant profit engines, even as it navigates regulatory pressure and a costly bet on the future of computing.