The trade deficit widened sharply in July to the largest since early 2025, reflecting a surge in imports of computers and other technology equipment.
The gap in goods and services trade grew 24.4% from the prior month to $88.6 billion, Commerce Department data showed Thursday. The value of imports increased 2.8% and exports fell 2.1%.
The report showed an 11.4% surge in imports of capital goods — a category that includes computers and accessories, semiconductors and telecommunications equipment but excludes autos — the largest advance since 1993.
The rapid rate of technology imports reflects the investment race in artificial intelligence, a key driver of U.S. economic growth. At the same time, the trade deficit has fluctuated in recent months as the Iran war helped boost global demand for U.S. petroleum products while American firms try to mitigate supply-chain disruptions.
While many tariffs were struck down by the Supreme Court earlier this year, the Trump administration is using other authorities to impose duties. The U.S .levied 50% duties on billions of dollars of Canadian goods, and Canada retaliated after trade talks fell apart last month.
Imports of computer accessories increased $6.6 billion, the most on record, while inbound shipments of computers, semiconductors and telecommunications equipment all rose.
Meanwhile, the value of outbound U.S. shipments of industrial supplies such as oil and petroleum products declined. Exports of nonmonetary gold also fell. Trade in this category has been particularly volatile since early last year.
GDP Impact
The July trade data will help economists shape their estimates for third-quarter gross domestic product. Before the figures, the Federal Reserve Bank of Atlanta’s GDPNow forecast indicated net exports will subtract 1.34 percentage points from third-quarter GDP. That would be the most since the start of 2025.
On an inflation-adjusted basis, the merchandise-trade deficit widened to $106.4 billion in July, also the largest since March of last year.
By country, the U.S. merchandise-trade deficit with Mexico widened to a record, while the shortfall with Canada narrowed.
The U.S. deficit with Taiwan, a key supplier of semiconductors, widened by the most since February. The gap with Vietnam — a major beneficiary of supply-chain shifts since trade tensions between the U.S. and China erupted in President Donald Trump’s first term — widened.
Niquette writes for Bloomberg.
The post AI boom blows the biggest hole in the trade gap in more than a year appeared first on Los Angeles Times.
