The US trade deficit widened significantly in July, driven by a surge in imports of capital goods and industrial supplies, raising concerns that trade could weigh on economic growth in the third quarter. The gap jumped 32.5% to $78.3 billion, the Commerce Department’s Bureau of Economic Analysis reported Thursday, well above economists’ expectations of $75.7 billion. Imports rose 5.9% to $358.8 billion, while exports edged up 0.3% to $280.5 billion.
A surge in industrial supplies and materials, including a $9.6 billion spike in nonmonetary gold, fuelled the jump in goods imports, which climbed 6.9% to $283.3 billion. Capital goods imports also hit a record $96.2 billion, boosted by computers, telecom equipment and machinery, though semiconductor shipments slipped. Vehicle imports declined $1.4 billion.
Exports of goods were little changed at $179.4 billion. A $0.6 billion increase in capital goods shipments, led by computer accessories and civilian aircraft, offset declines in excavating machinery and finished metal shapes. Nonmonetary gold exports rose $2.9 billion.
The goods trade deficit widened 21.2% to $103.9 billion, with the gap with China expanding by $5.3 billion to $14.7 billion. The US also posted large goods trade deficits with Mexico, Vietnam, the EU, Switzerland, India, South Korea and Japan.
In services, imports rose $1.7 billion to a record $75.5 billion, led by transport, travel and business services. Exports climbed $0.6 billion to an all-time high of $101.0 billion, lifted by transport, intellectual property charges and government services. Travel exports fell $0.3 billion amid tighter immigration policies.
The widening gap follows volatile trade swings linked to former President Donald Trump’s tariff measures, many of which were ruled illegal by a U.S. appeals court last week. Trade subtracted a record 4.61 percentage points from GDP in the first quarter before rebounding to add 4.95 points in the April–June period. The economy grew at a 3.3% annualized pace last quarter, and the Atlanta Fed is projecting 3.0% growth in the current quarter.
