U.S. Trade Deficit Reaches 3-Year High

The U.S. trade deficit widened in July, effectively reaching its highest gap in the past three years. The Commerce Department reported that the trade gap jumped for the second straight month by 9.5% to $50.1 billion, while the June data was revised to show the trade deficit rose to $45.7 billion versus the initial reporting of $46.3 billion.

The byproduct of the tit-for-tat trade war between the United States and China was evident in the data as the politically-sensitive goods trade deficit with China logged a 10% increase to a record $36.8 billion. All in all, exports fell 1% due to a decline in aircraft and soybean shipments, while imports climbed by 0.9%.

The latest trade deficit figures underscore the impact of U.S. President Donald Trump’s tariff battles with the European Union, Canada, and Mexico, which could become more evident in subsequent quarters. A poll of economists by Reuters forecasted the trade deficit by $50.3 billion in July.

“If we see tariffs and retaliatory tariffs, it will disrupt the flows of goods and services — and you’ve seen some of that,” said Stephen Stanley, chief economist at Amherst Pierpont Securities LLC.

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