US trade gap in July hits biggest in over a year on AI buildout
Docked cargo ships are loaded with shipping containers at Port Elizabeth, New Jersey, U.S., July 12, 2023. REUTERS/Mike Segar/File Photo
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WASHINGTON: The US trade deficit in July widened to its largest since March 2025, government data showed Thursday (Sep 3), as imports climbed on the back of the booming AI tech build-out.
US trade has seen wide fluctuations since President Donald Trump returned to the White House last year and rolled out sweeping tariffs on allies and competitors, in efforts to narrow the trade gap.
But the trade deficit in the world’s biggest economy grew to US$88.6 billion in July – a 24.4 per cent increase from the month prior – as exports of crude oil and gold fell while imports of tech products jumped.
Exports dipped 2.1 per cent to US$310.7 billion, the Department of Commerce said.
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Imports rose 2.8 per cent to US$399.3 billion, bolstered by computers, computer accessories and semiconductors.
The US deficit with Taiwan, a major manufacturer of chips, reached a record US$20.7 billion for the month.
US trade gaps with Mexico, Thailand, South Korea and Malaysia for the month also hit their highest on record.
While Trump’s tariffs have hit economies representing the majority of US trade, American officials have been careful to exempt products like chips, smartphones and other types of electronics.
Washington is looking to develop new tariffs on semiconductors, Commerce Secretary Howard Lutnick told CNBC Wednesday, although adding that tech giants are aware of the Trump administration’s plans.
“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.
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.
A separate trade investigation taking aim at 16 partners including China, the European Union and Taiwan, could lead to a further round of tariffs.
The United States meanwhile is engaged in a trade war with neighbouring Canada, with which its deficit narrowed in July. Last month, Trump slapped a 50 per cent duty on billions of dollars in Canadian goods, prompting Ottawa’s planned retaliation.
Also weighing on trade flows is fallout from the Middle East war, with Iran largely blocking off the Strait of Hormuz – a key waterway for global energy and fertiliser transit.
This has helped to raise demand for US energy products, but US firms have been grappling with snarled supply chains.
Source: AFP/gs
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