Imports drive US trade deficit to 17-month high

WASHINGTON — The US trade deficit in July widened to its largest since March 2025, government data showed Thursday, as imports climbed on the back of the booming AI tech build-out.

The United States has seen wide trade fluctuations since the Trump administration took office last year and rolled out sweeping tariffs on allies and competitors.

The trade deficit in the world's biggest economy grew to $88.6 billion in July, a 24.4 percent increase from the month prior, as exports of crude oil and gold fell while imports of tech products jumped.

Exports dipped 2.1 percent to $310.7 billion, the US Department of Commerce said, while imports rose 2.8 percent to $399.3 billion, bolstered by computers, computer accessories and semiconductors.

The US deficit with Mexico, Vietnam, Thailand, South Korea and Malaysia also hit its highest on record.

While Trump's tariffs have hit economies representing the majority of US trade, US officials have been careful to exempt products like chips, smartphones and other types of electronics.

Washington is looking to impose new tariffs on semiconductors, US Commerce Secretary Howard Lutnick told CNBC Wednesday, adding that tech giants are aware of the Trump administration's intent.

"What you're going to see is targeted, thoughtful tariff policy that basically says if you build here, you don't pay," Lutnick said.

Over the past year, businesses have scrambled to step up imports before new waves of US duties kicked in, contributing to fluctuations in monthly trade figures.

Services expansion

Meanwhile, separate data showed that the US services sector continued to expand in August, although price pressures remained a concern.

The US services purchasing managers' index rose to 55.4 percent in August, its 26th consecutive month in expansion territory, according to data released Thursday by the Institute for Supply Management.

The US job market also rebounded in August, with employers adding 162,000 jobs after an upwardly revised gain of 21,000 in July, while the unemployment rate stayed at 4.1 percent, according to US Labor Department data released Friday.

Average hourly wages, however, rose 3.1 percent last month from a year earlier, the weakest year-on-year increase since May 2021.

The latest data come amid ongoing tariff policy changes. Although the US Supreme Court struck down many of Trump's global tariffs in February, officials in July replaced them with fresh duties targeting 60 trading partners.

XINHUA-AGENCIES