US trade balance sinks deeper into the red as imports hit record high despite tariffs
SPY•The US trade deficit widened 13.7% to $105.6 billion in August, its highest level in 17 months, as imports rose 4.3% to a record $420.8 billion. Exports increased 1.4% to $315.2 billion.
1. Imports reach a record
The US trade deficit widened more than expected in August as imports climbed amid robust domestic demand. The shortfall rose to $105.6 billion, compared with economists’ forecast of $102.0 billion. Goods imports increased 5.3% to $342.2 billion, with capital goods imports reaching a record $146.4 billion, driven by semiconductors and other industrial machinery.
2. Trade may weigh on growth
Exports rose 1.4% to $315.2 billion. Trade has subtracted from GDP for three straight quarters, and economists estimate it could cut as much as 2.5 percentage points from third-quarter GDP growth. Goldman Sachs economists lowered their third-quarter growth estimate to a 3.1% annualized rate from 3.4%.
3. Deficits with trade partners
The US recorded goods trade deficits with Mexico, Vietnam and Malaysia, among other partners. The shortfall with Canada increased $4.1 billion, with imports likely reflecting businesses front-loading orders to avoid higher tariffs, economists said.
