Business

Trade Deficit Soared in July
By Reuters | 29 Aug, 2025

Efforts to secure inventories ahead of Trump tariffs drove up imports to record levels and caused the deficit to jump 22.1%.

An American flag flutters over a ship and shipping containers at the Port of Los Angeles, in San Pedro California, U.S., May 13, 2025. REUTERS/Mike Blake/File Photo

The U.S. trade deficit in goods widened sharply in July as imports surged, suggesting trade could be a major drag on economic growth in the third quarter.

The goods trade gap soared 22.1% to $103.6 billion last month, the Commerce Department's Census Bureau said on Friday. Economists polled by Reuters had forecast the goods trade deficit would rise to $89.45 billion.

Imports of goods jumped $18.6 billion to $281.5 billion. Goods exports dipped $0.1 billion to $178.0 billion.

An ebb in import flows led to a sharp contraction in the trade deficit in the second quarter, which added a record 4.95 percentage points to gross domestic product growth that period.

The economy grew at a 3.3% annualized rate last quarter. GDP contracted at a 0.5% rate in the January-March quarter, weighed down by a sharp deterioration in the trade deficit that was driven by businesses front-running imports at a record pace before President Donald Trump's sweeping tariffs kicked in.

The Atlanta Federal Reserve is currently estimating GDP will increase at a 2.2% rate in the third quarter.

(Reporting by Lucia Mutikani; Editing by Paul Simao)