On the surface, the latest numbers show President Donald Trump may be poised to deliver on one of his biggest economic promises: reducing the annual U.S. trade deficit with China and the world. Dive into the numbers, though, and that accomplishment comes with plenty of caveats and even some worrying signs for the U.S. economy.

November trade data released Tuesday showed that the U.S. goods and services deficit decreased by 0.7%, or $3.9 billion, in the first 11 months of 2019 from the same period a year earlier. That puts the annual shortfall on track to shrink for the first time since Trump took office.

“Clearly the Trump tariffs are working,” White House adviser Peter Navarro told Bloomberg.

For Trump, exports and imports are like assets and liabilities on a corporate balance sheet: If you’re in the red, you’re losing. Nevermind that the U.S. has been running a trade gap on an annual basis since the mid-1970s. Or that deficits typically widen during expansions and shrink during recessions, as they have during the past few U.S. contractions because waning domestic demand curbed imports.

For the president, American manufacturing jobs have shifted overseas thanks to decades of poor trade policy and the deficit is the gauge that will show whether his strategy is working.

Or will it? Yesterday’s numbers point to dueling realities. Yes, Trump’s tariffs are shifting trade flows in some intended ways. But not all the changing contours are positive signs. Here’s a closer look:

  • The biggest contributor to the drop in the deficit from January through November was the continuing boom in shale oil. In nominal terms, the U.S.’s petroleum-trade shortfall with the world fell to $13.1 billion in the first 11 months of 2019, more than $35 billion less than it was in the same period of 2018.
  • When it comes to the rest of the U.S. economy — including the manufacturing sector — the picture looks very different. The non-petroleum deficit grew almost $20 billion to $766 billion in the first 11 months of 2019, putting it on track to beat 2018’s full-year record gap of $825 billion.
  • The other major factor driving the narrowing deficit was a decrease in imports rather than an increase in exports. That is often a sign of weaker demand for the U.S. rather than an economy poised for a burst of growth.
  • It also creates a statistical quirk that has long been the source of a bitter debate between advocates of tariffs like Navarro and other economists. Because of the way gross domestic product is calculated, a reduction in imports contributes to faster headline GDP growth. Yet most economists argue that’s an accounting anomaly rather than a reason to cheer, especially if it is a sign of a weakening demand rather than stronger domestic production.
  • It’s also unclear how much of a political asset a small reduction in the trade deficit in 2019 is going to be in an election year. At more than $562 billion, the U.S. goods and services deficit in the first 11 months of the year is already more than $60 billion higher than it was in all of 2016, the year Trump was elected.

Over the course of Trump’s term, the deficit has widened, so in that sense he has not succeeded.

“What he has shown is if you put big enough tariffs on, that can change both the bilateral balance of trade,” said Brad Setser, a senior fellow at the Council on Foreign Relations. “What he hasn’t shown is that his tariff-based strategy can generate a revival in U.S. manufacturing.”

Stay tuned. We’ll know more on Friday about how factory workers fared in 2019 when the Labor Department releases the employment report for December. Even if manufacturing jobs rise by the median economist estimate of 5,000 positions, it will be the second-worst calendar-year performance in the past decade for that key Trump constituency.

This article was provided by Bloomberg News.