American businesses have been increasing their orders when the Trump administration temporarily lowers tariffs and delaying purchases when trade tensions are at their greatest.
In July, the U.S. goods trade deficit increased 22.1% to $103.6 billion from $84.9 billion, the Commerce Department said in its advance estimate on Friday.
It was a far larger deficit than anticipated. The Econoday research group predicted that the deficit will increase to $87.7 billion.
Imports jumped ahead of the Trump White House’s deadline for country-specific tariffs in early August, according to economists.
Stephen Stanley, Santander’s senior U.S. economist, stated, “We are still not entirely past the significant swings in trade flows brought on by tariffs.”
In July, the government’s monthly trade data showed a rise of $281.5 billion in imports, a 7.1% increase.
Capital goods and industrial supplies were the main causes of the rise in imports. Prior to the administration’s decision to impose tariffs on the metal in late July, Stanley suggested that this might have something to do with copper imports.
The value of exports decreased by 0.1% to $178 billion.
Before some of President Donald Trump’s tariffs are imposed and after he temporarily loosens them, American businesses have been increasing their orders. Orders have frequently been postponed during periods of peak trade tensions.
Since reaching a record $162 billion in March, the deficit has fluctuated like a seesaw.
The U.S. gross domestic product for the third quarter is anticipated to be negatively impacted by the larger deficit in July. However, it won’t be evident for another two months how much the trade difference could affect GDP.
Inventory, or manufactured but unsold items, is another factor that is taken into account when calculating GDP. Increased inventories boost GDP.
An advance copy of retail stocks also revealed a 0.2% advance in July, as did an advance check at wholesale stockpiles.
