Trade deficit surges to highest level in 12 years

The U.S. trade WASHINGTON — deficit surged in July to $63.6 billion, the highest level in 12 years, as imports jumped by a record amount.

The Commerce Department reported that the July deficit, the gap between what America buys andwhat it sells to foreigners, was 18.9% higher than the June deficit of $53.5 billion. It was the largest monthly deficit since July 2008 during the 2007-2009 recession.

The July deficit increase was driven by a record 10.9% increase in imports which rose to $231.7 billion. Exports were also up but by a smaller 8.1% to $168.1 billion.

When Donald Trump campaigned for president in 2016 he pledgedtosharply lower thecountry’s large tradedeficits, especially with China, which for years has been the country with the largest tradesurpluswiththeUnitedStates.

Butdespiteanumberofhigh-profile trade battles and a renegotiation of the North American Free TradeAgreementwithCanadaand Mexico, America’s trade deficits have remained stubbornly high.

For July, thedeficit with China in goodstotaled $31.6billion, an11.5% increase fromthe June imbalance.

ThegoodsdeficitwithMexicohit arecordhighof$10.6billioninJuly. Trump has claimed the new free trade deal he has negotiated with Mexico and Canada will be a boon for U.S. workers and businesses.

The U.S. ran a deficit in goods trade of $80.1 billion in July, the highest on record. The U.S. surplus in services, such as banking and insurance, declined to $17.4 billion, the smallest services surplus sinceAugust 2012anda reflection in part of the decline in airline travel during the pandemic.

Theincreaseintheoveralldeficit in Julywasbigger thaneconomists hadbeenexpecting. Thepandemic has seriously disruptedglobal supplychainsthisyearandeconomists saidwhile it was good news to see trade rebounding now, the gains are coming from very low levels.