US goods-trade deficit widens to largest since March 2025

[WASHINGTON] The US merchandise-trade deficit widened in July to the largest since early last year on a multi-decade surge in inbound shipments of capital equipment.

The shortfall in goods trade grew 17.2 per cent from the prior month to US$118.8 billion, the largest since March 2025, Commerce Department data showed on Thursday (Aug 27). The median estimate in a Bloomberg survey of economists called for a US$100.5 billion deficit. The figures aren’t adjusted for inflation.

Merchandise imports climbed 3.7 per cent. The advance was fuelled by the largest increase in capital goods – a category that includes computers and accessories, semiconductors and telecommunications equipment – since 1993. US exports of goods fell 2.9 per cent.

The trade deficit has fluctuated in recent months as the Iran war helped boost global demand for US petroleum products and American firms stockpiled goods and materials to mitigate supply-chain disruptions. Companies are adjusting to changing tariff rates at the same time imports of equipment linked with the artificial intelligence remain healthy.

Thursday’s figures showed both inbound and outbound shipments of industrial supplies, where crude oil and petroleum products are counted, declined in July. The category also includes nonmonetary gold, which has helped fuel swings over the past year.

Imports of consumer goods rose only slightly, while other categories showed a decline in inbound shipments.

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Figures on retail inventories, released alongside the goods trade data, showed a 0.7 per cent increase. Wholesalers continued to add to inventories.

The trade and inventories data will help inform the government’s initial estimate of third-quarter gross domestic product, which is due in October. Prior to the latest merchandise trade report, the Federal Reserve Bank of Atlanta’s GDPNow model saw net exports reducing GDP growth by 0.14 percentage point. In the second quarter, they subtracted 1.14 percentage points from GDP. 

More complete July trade figures that include the balance on the services account and inflation-adjusted numbers on merchandise trade are due Sept 3. BLOOMBERG