US trade gap widens to largest in four months on import flurry
The value of imports increased 5.9% in July, the most since the start of the year
[WASHINGTON] The US trade deficit widened in July to a four-month high as companies raced to import goods and materials before President Donald Trump unveiled new tariffs on global trading partners.
The goods and services trade gap grew nearly 33 per cent from the prior month to US$78.3 billion, Commerce Department data showed on Thursday (Sep 4). The median estimate in a Bloomberg survey of economists called for a nearly US$78 billion deficit.
The value of imports increased 5.9 per cent in July, the most since the start of the year, while exports edged up. The figures aren’t adjusted for inflation.
The surge in imports was driven by inbound shipments of industrial supplies, which rose to the highest level in four months. Imports of consumer goods also climbed, and incoming shipments of capital equipment excluding autos advanced by the most since the start of the year.
The report illustrates a rush by US companies to secure more goods before so-called reciprocal tariff rates were anticipated to take effect for a slew of countries that hadn’t yet reached trade deals with the US.
The large monthly swings in trade this year that have introduced similar volatility in the government’s measure of economic activity – gross domestic product.
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The surge in July imports of industrial supplies reflected a sharp increase in imports of non-monetary gold. The Bureau of Economic Analysis uses a separate calculation when incorporating gold into GDP.
Companies have a bit more clarity on import duties after the Trump administration announced deals with a number of key US partners. Still, trade negotiations continue with China, and a federal court ruled last week that many global tariffs were imposed illegally. Trump is appealing to the Supreme Court.
The July report showed the merchandise-trade shortfall with China widened for the first time in six months, while the deficit with Mexico widened slightly. The goods trade deficit with Canada widened after reaching the smallest since 2020 in June.
On an inflation-adjusted basis, the merchandise trade deficit widened to US$100.1 billion in July after hitting a record earlier this year. BLOOMBERG
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