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U.S. goods-trade deficit widens to largest since March 2025
Merchandise imports climbed 3.7% while U.S. exports of goods fell 2.9%
Containers at the Bayport Container Terminal at the Port of Houston in Seabrook, Texas. (Mark Felix/Bloomberg)
Key Takeaways:
- The U.S. merchandise-trade deficit widened in July to the largest since early last year on a multi-decade surge in inbound shipments of capital equipment. The shortfall in goods trade grew 17.2% from the prior month to $118.8 billion, the largest since M
- Imports increased 3.7% on the biggest capital-goods surge since 1993, while exports dropped 2.9% and inventories grew at retailers and wholesalers.
- More complete July trade data including services and inflation-adjusted figures are due Sept. 3, while the latest report will inform third-quarter GDP estimates.
The U.S. merchandise-trade deficit widened in July to the largest since early last year on a multi-decade surge in inbound shipments of capital equipment.
The shortfall in goods trade grew 17.2% from the prior month to $118.8 billion, the largest since March 2025, Commerce Department data showed Aug. 27. The gap was wider than all estimates in a Bloomberg survey of economists. The figures aren’t adjusted for inflation.
Merchandise imports climbed 3.7%. The advance was fueled by the largest increase in capital goods — a category that includes computers and accessories, semiconductors and telecommunications equipment — since 1993. U.S. exports of goods fell 2.9%.
The trade deficit has fluctuated in recent months as the Iran war helped boost global demand for U.S. petroleum products and American firms stockpiled goods and materials to mitigate supply chain disruptions. Companies are adjusting to changing tariff rates at the same time imports of equipment linked with the artificial intelligence remain healthy.
The Aug. 27 figures showed both inbound and outbound shipments of industrial supplies, where crude oil and petroleum products are counted, declined in July. The category also includes nonmonetary gold, which has helped fuel swings over the past year.
Imports of consumer goods rose only slightly, while other categories showed a decline in inbound shipments.
Inventories building
Figures on retail inventories, released alongside the goods trade data, showed a 0.7% increase. Wholesalers continued to add to inventories.
The advance international trade deficit in goods increased to $118.8 billion in July 2026 from $101.4 billion in June 2026 as exports decreased and imports increased.
Learn more: https://t.co/qZYlxNEIvs #CensusEconData #AdvanceInternationalTradeGoods pic.twitter.com/kd0UyQcHdk — U.S. Census Bureau (@uscensusbureau) August 27, 2026
The trade and inventories data will help inform the government’s initial estimate of third-quarter gross domestic product, which is due in October. Prior to the latest merchandise trade report, the Federal Reserve Bank of Atlanta’s GDPNow model saw net exports reducing GDP growth by 0.14 percentage point. In the second quarter, they subtracted 1.14 percentage points from GDP.
More complete July trade figures that include the balance on the services account and inflation-adjusted numbers on merchandise trade are due Sept. 3.
Separate data out Aug. 27 showed initial applications for unemployment insurance edged lower last week to 203,000 — an historically low level.
