The U.S. trade deficit widened by 24.4% in July to $88.6 billion, the Commerce Department reported on Thursday, exceeding economist expectations of $90.0 billion. The goods trade deficit, which excludes services, rose 17.3% to $119.6 billion, while the inflation-adjusted goods deficit increased 12.7% to $106.4 billion.
Total imports climbed 2.8% to $399.3 billion, with goods imports up 3.7% at $320.6 billion. Imports of capital goods surged by $14.4 billion to a record $140.3 billion, driven by demand for computers, accessories and semiconductors tied to artificial intelligence expansion. Industrial supplies and materials imports fell by $1.8 billion, with crude oil imports declining alongside falling prices.
Exports declined 2.1% to $310.7 billion, with goods shipments down 3.0% at $201.0 billion. Industrial supplies and materials exports dropped by $8.7 billion, largely reflecting lower crude oil and non-monetary gold shipments. Capital goods exports rose by $1.9 billion, while consumer goods exports increased by $1.7 billion, supported by pharmaceuticals.
The trade imbalance subtracted 1.14 percentage points from GDP growth in the second quarter, when the economy expanded at an annualized rate of 1.5%. Strong domestic demand during the period was fueled by consumer spending and business investment in artificial intelligence, which simultaneously lifted imports and widened the trade gap.
