Trade Gap Hits 4-Month High as Firms Rush to Beat Tariffs
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The U.S. 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 onÌýglobal trading partners.Ìý
The goods and services trade gap grew nearly 33% from the prior month to $78.3 billion, Commerce Department data showed Sept. 4. The median estimate in a Bloomberg survey of economists called for a nearly $78 billion deficit.
The value of imports increased 5.9% in July, the most since the start of the year, while exports edged up. The figures aren’t adjusted for inflation.Ìý
The surge in imports was driven by industrial supplies, which rose to the highest level in four months amid a surge in inbound shipments of gold. 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 U.S. companies to secure more goods before so-called reciprocal tariff rates were anticipated to take effect for aÌýslew of countriesÌýthat hadn’t yet reached trade deals with the U.S. Imports had fallen for three straight months after a massive first-quarter surge driven by businesses trying to front-run the president’s April 2 tariff announcement.
(Bloomberg)
The large monthly swings in trade this year that have introduced similar volatility in the government’s measure of economic activity — gross domestic product.
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.
Inbound shipments of non-monetary gold, which includes jewelry, climbed to a record $10.5 billion — ahead of higher duties on imports from Switzerland.
Companies have a bit more clarity on import duties after the Trump administration announced deals with a number of key U.S. partners. Still, trade negotiations continue with China, and a federal courtÌýruled last weekÌýthat many global tariffs were imposed illegally. TrumpÌýis appealingÌýto 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 $100.1 billion in July after hitting a record earlier this year.
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