U. S. trade deficit surges

WASHINGTON » The U. S. trade 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 and what 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- 09 recession.

The July deficit increase was driven by a record 10.9% increase in imports, which rose to $ 231.7 billion.

Exports also were up, but by a smaller 8.1% to $ 168.1 billion.

When Donald Trump campaigned for president in 2016 he pledged to lower the country’s large trade deficits sharply, especially with China.

But despite high- profile trade battles and a renegotiation of the North American Free Trade Agreement with Canada and Mexico, America’s trade deficits have remained stubbornly high.

For July, the deficit with China in goods totaled $ 31.6 billion, an 11.5% increase from the June imbalance.

The goods deficit with Mexico hit a record high of $ 10.6 billion in July. Trump has claimed the new free trade deal he has negotiated with Mexico and Canada will be a boon for American workers and businesses.

The United States 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 since August 2012 and a reflection in part of the decline in airline travel during the pandemic.

The increase in the overall deficit in July was bigger than economists had been expecting.

Michael Pearce, senior U. S. economist at Capital Economics, said he expected the rising deficit, which subtracts from U. S. growth, would cut the gross domestic product for the July- September quarter by about 1 percentagepoint.