The U.S. trade deficit jumped in July as imports soared, despite President Trump’s attempts to change the balance of trade through tariffs. The increase followed China’s imposing retaliatory tariffs on the U.S., suggesting that the threat of a trade war is not quickly lowering the trade deficit.
The Commerce Department reported Wednesday that the trade deficit grew 9.5 percent July to $50.1 billion, up from $45.7 the previous month. The shift was due to declines in soybean and aircraft parts exports and a surge in oil prices, driving the cost of imports higher.
The shift happened despite a series of new tariffs institute by the Trump administration of 25 percent on steel and 10 percent on aluminum imports as well as $50 billion worth of Chinese goods. Further tariffs are expected, including 25 percent ones on another $200 billion of Chinese goods and possible 25 percent tariffs for auto and auto parts imports. The administration has defended the policies as necessary to counter China’s aggressive policies.
[Trump: ‘Only fools would disagree’ with tariffs — China is ‘doing poorly’]
China hit back by placing tariffs of between 5 and 25 percent on $60 billion worth of U.S goods and has warned of additional responses. Manufacturers have urged the U.S. to hastily resolve the fight, arguing the tariffs are doing far more harm than good.
The trade gap with U.S’s. North American Free Trade Agreement partners shifted in July, with the gap between the U.S. and Mexico shrinking 25.3 percent to $5.5 billion. The deficit with Canada rose 57.6 percent to $3.1 billion. The trade deficit with the European Union soared 50 percent to a record high of $17.6 billion.
