New data released Thursday shows that the U.S. trade deficit shot up by $17.4 billion in July, reaching levels not seen since early last year and a 24.4% month-over-month growth. Overall, the value of imports increased 2.8% and exports fell 2.1%.
That jump came amid disturbances to shipping due to current conflict between the U.S. and Iran that has resulted in blockades of the Strait of Hormuz. Yahoo Finance noted that U.S. crude oil exports dropped $4.5 billion on a month-over-month basis per the July data.
Experts have also cited other factors as contributors to the deficit increase – including a demand for artificial intelligence programs.
According to research available through the Library of Congress, the U.S. had run a trade deficit since 1976. Generally speaking, that’s because we spend more on importing foreign goods and services than foreigners spend on exports of U.S. goods and services.
“However, the economic concepts behind what causes the trade balance may be less apparent. The reason that the trade deficit must equal net foreign capital flows is because the only way the United States can import more than it exports is if it borrows an amount equivalent to the difference between the two (i.e., the trade deficit),” the research explained. It added that: “There are two main reasons for this (1) The United States has a relatively low national saving rate, and (2) U.S. investment opportunities are relatively attractive to foreigners.”
The new data released by the U.S. Census Bureau and the U.S. Bureau of Economic Analysis showed a $88.6 billion trade deficit in July, up $17.4 billion from $71.2 billion in June. Bloomberg reported that this is the largest the deficit has been since early last year and that it reflects a surge “in imports of computers and other technology equipment.”
Yahoo Finance specified that the deficit is actually at its highest level since March 2025, when importers stocked up ahead of President Donald Trump's “Liberation Day”. In June, there was a downtick in the deficit as the World Cup spurred spending in the U.S.
Reuters reported that that “strong domestic demand boosted imports, positioning trade to exert another drag on economic growth in the third quarter,” based on the July numbers. It also said economists polled by the outlet estimated a deficit of $90.0 billion.
Experts like Grace Zwemmer, the U.S. Economist at Oxford Economics who was cited by Yahoo Finance, said that spending related to AI demand might be playing into the deficit even though that spending might also be good for the economy. In an echo of the pre-Liberation Day deficit, Yahoo Finance also noted that “July results also appeared to show some importers stocking up ahead of anticipated tariff uncertainty,” referring to new tariffs Trump recently announced.
Going forward, Yahoo Finance said the “$15.2 billion trade deficit with China in July could be especially significant, coming ahead of a highly anticipated visit from Chinese President Xi Jinping to the US later this month.”
