Trade Gap Balloons to $88.6B on AI Imports

The US trade deficit widened sharply in July to $88.6 billion, up $17.4 billion from a revised $71.2 billion in June — a 24.4% jump and the largest gap since early 2025, according to figures released Thursday by the Census Bureau and the Bureau of Economic Analysis.

The driver was imports. Companies pulled in computers and other technology gear at a record clip to build the data centers powering the artificial intelligence boom, Bloomberg and The New York Times reported. Reuters reported capital goods imports hit an all-time high.

Exports fell at the same time, widening the gap from both ends.

The Numbers

Imports rose 2.8% to $399.3 billion in July, an increase of $10.8 billion from June. Goods imports alone climbed $11.4 billion to $320.6 billion.

Exports fell 2.1% to $310.7 billion, down $6.6 billion. Goods exports dropped $6.2 billion to $201.0 billion; services exports slipped $0.4 billion to $109.7 billion.

The goods deficit grew $17.6 billion to $119.6 billion. The services surplus edged up $0.2 billion to $31.0 billion.

Adjusted for prices, the real goods deficit rose 12.7% to $106.4 billion — a smaller increase than the 17.7% jump in the nominal figure, meaning much of the widening was real volume, not just higher prices.

The three-month moving average deficit rose $11.9 billion to $78.5 billion.

The Year-to-Date Picture

Despite July's blowout, the deficit is far smaller than a year ago. Through July, the goods and services deficit is down $188.4 billion, or 29.6%, from the same period in 2025.

Exports are up $237.2 billion, or 12.0%, year-to-date. Imports are up $48.8 billion, or 1.9%.

Who America Runs Deficits With

The biggest July goods deficits, on a Census basis: Mexico ($27.5 billion), Vietnam ($23.3 billion), Taiwan ($18.1 billion), China ($15.2 billion) and South Korea ($10.4 billion).

The largest surpluses were with the Netherlands ($7.8 billion), South and Central America ($6.6 billion), Hong Kong ($3.1 billion) and the United Kingdom ($2.5 billion).