US trade deficit dips 4.3% in July to $70.1B

The U.S. trade deficit narrowed slightly to $70.1 billion in July as economic recovery overseas helped boost American exports while imports declined.

The Commerce Department reported Thursday that the trade deficit fell 4.3% in July after surging to a record $73.2 billion in June. The trade deficit represents the gap between what the country exports to the rest of the world and the imports it purchases from other countries.

In July, exports jumped 1.3% to $212.6 billion, reflecting revived overseas demand, while imports edged down a slight 0.2% to $282.9 billion.

The politically sensitive goods deficit with China rose 2.9% in July from June to $28.6 billion and totals $187.2 billion through the first seven months of this year, up 15% from the same period a year ago.

The trade deficit with China was the largest U.S. deficit with any country. Donald Trump targeted what he saw as China’s unfair trade practices during his presidency, triggering a trade war between the world’s two largest economies, with China retaliating to America’s tariffs by raising its own tariffs on U.S. products. President Joe Biden has not indicated how he plans to deal with the economic tensions between the nations.

This year, the U.S. trade deficit totals $141.7 billion, 6% below the total for the same period last year. The deficit for all of 2020 was $676.7 billion, 17.4% higher than in 2019.

Economists believe that deficits for the rest of this year should moderate as the surge in consumer demand after the country re-opened will slow, reducing demand for foreign goods, while U.S. exports should continue rising as overseas economies recovery. However, analysts caution that a lot will depend on COVID-19 cases in the U.S. and abroad.