The U.S. trade deficit in July widened to $78 billion, the largest in two years
The trade deficit in the United States expanded to $78 billion in July, a year-on-year increase of 7.9%. According to data from the U.S. Department of Commerce, the total value of goods and services imports reached the highest level since March 2022. The non-inflation-adjusted deficit is $97.6 billion, which may have a negative impact on GDP in the third quarter, with a forecasted reduction in growth of 0.35%. The main reason for the trade deficit is the surge in goods imports, as businesses and retailers increase stocking ahead of the upcoming holidays, driving up port freight volumes
The data released by the U.S. Department of Commerce on Wednesday showed that the U.S. trade deficit in goods and services in July increased by 7.9% month-on-month, reaching $78.8 billion.
Unadjusted for inflation, the total value of U.S. imports of goods and services in July increased by 2.1%, reaching the highest level since March 2022. Imports covered a wide range of goods, including industrial products, capital goods, and consumer goods.
After adjusting for inflation, the U.S. trade deficit in goods in July expanded to $97.6 billion, the highest level since June 2022.
The continuously expanding trade deficit indicates that following the drag on GDP from trade in the second quarter, trade may once again have a negative impact on GDP in the third quarter. The Atlanta Federal Reserve's GDPNow forecast shows that trade will reduce U.S. third-quarter GDP growth by 0.35%.
The main reason for the expansion of the U.S. trade deficit is the surge in goods imports. It is reported that U.S. companies may face a strike by dockworkers on the East Coast and Gulf Coast at the end of this month, prompting businesses to increase their inventory levels in preparation for a possible strike. At the same time, U.S. retailers are also stocking up for the holiday shopping season. This has led to a surge in maritime traffic on the U.S. West Coast, with the cargo volume at the ports of Los Angeles and Long Beach, which account for about one-third of U.S. container imports, reaching a historic third in July