US trade gap widens to largest since early 2025 on AI push
The gap in goods and services trade grew 24.4% from the prior month to US$88.6 billion
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[WASHINGTON] The US trade deficit widened sharply in July to the largest since early 2025, reflecting a surge in imports of computers and other technology equipment.
The gap in goods and services trade grew 24.4 per cent from the prior month to US$88.6 billion, Commerce Department data showed on Thursday (Sep 3). The value of imports increased 2.8 per cent and exports fell 2.1 per cent.
The report showed an 11.4 per cent surge in imports of capital goods – a category that includes computers and accessories, semiconductors and telecommunications equipment but excludes autos – the largest advance since 1993.
The rapid rate of technology imports reflects the investment race in artificial intelligence, a key driver of US economic growth. At the same time, the trade deficit has fluctuated in recent months as the Iran war helped boost global demand for US petroleum products while American firms try to mitigate supply-chain disruptions.
While many tariffs were struck down by the Supreme Court earlier this year, the Trump administration is using other authorities to impose duties. The US levied 50 per cent duties on billions of dollars of Canadian goods, and Canada retaliated after trade talks fell apart last month.
Imports of computer accessories increased US$6.6 billion, the most on record, while inbound shipments of computers, semiconductors and telecommunications equipment all rose.
Meanwhile, the value of outbound US shipments of industrial supplies such as oil and petroleum products declined. Exports of nonmonetary gold also fell. Trade in this category has been particularly volatile since early last year.
The July trade data will help economists shape their estimates for third-quarter gross domestic product. Before the figures, the Federal Reserve Bank of Atlanta’s GDPNow forecast indicated net exports will subtract 1.34 percentage points from Q3 GDP. That would be the most since the start of 2025.
On an inflation-adjusted basis, the merchandise-trade deficit widened to US$106.4 billion in July, also the largest since March of last year.
By country, the US merchandise-trade deficit with Mexico widened to a record, while the shortfall with Canada narrowed.
The US deficit with China was little changed. The gap with Vietnam – a major beneficiary of supply-chain shifts since trade tensions between the US and China erupted in President Donald Trump’s first term – widened. BLOOMBERG
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