Bloomberg: US trade deficit widens to largest since early 2025

Fueled by a massive surge in technology imports, the US trade deficit expanded dramatically in July to reach its highest level since early 2025, Bloomberg reports, citing the Commerce Department.

The report said the figures released by the agency show the goods and services trade gap surged 24.4% from the previous month to hit $88.6 billion.

The department clarified that the swell was driven by a 2.8% rise in overall imports alongside a 2.1% drop in exports.

A central driver of the spike was capital goods imports—a group encompassing semiconductors, computer equipment, and telecommunications gear, excluding automobiles—which jumped 11.4%. That marks the category's sharpest monthly increase since 1993. This influx is largely propelled by the aggressive investment race surrounding artificial intelligence, a dominant engine of current US economic momentum.

Beyond tech demand, trade flows have swung in recent months as the conflict in Iran briefly stoked global demand for US energy exports, while domestic businesses continue working to navigate broader supply-chain volatility.

Trade friction has also intensified. Despite the Supreme Court striking down several tariffs earlier this year, the Trump administration has leveraged alternate legal mechanisms to enact new levies, including 50% duties on billions in Canadian goods following the collapse of trade negotiations last month, which prompted Canadian retaliatory measures.

The July influx featured a record $6.6 billion increase in computer accessories imports, along with notable gains in semiconductors, computers, and telecommunications equipment.

Conversely, US exports of nonmonetary gold and industrial supplies—such as petroleum and oil products—retreated. Trade in these sectors has experienced heightened volatility over the past year and a half.

These updated figures will play a crucial role as analysts refine their third-quarter economic projections. Before the report, the Federal Reserve Bank of Atlanta’s GDPNow tracker estimated that net exports would shave 1.34 percentage points off third-quarter GDP growth—the steepest drag since early 2025.

Adjusted for inflation, the merchandise-trade deficit broadened to $106.4 billion in July, its highest mark since March 2025.

Bilateral trade balances showed mixed trends:

Mexico: The US merchandise-trade deficit widened to a record high.

Canada: The trade gap narrowed.

China: The deficit held mostly steady.

Vietnam: The shortfall expanded as the country continues to absorb supply-chain shifts originating from US-China trade friction that began during Donald Trump's first presidency.

By Bakhtiyar Abbasov