The U.S. trade deficit in goods and services widened in August by 6.4% to $53.2 billion from $50 billion in July. That’s the biggest trade deficit in six months. The trade deficit with China rose to a record $38.6 billion from $36.8 billion in July. The trade deficit with Mexico rose to a record $8.7 billion from $5.5 billion in July.
A drop in the trade deficit in the second quarter helped bump up GDP growth in that quarter to 4.2%. An increase in the trade deficit will cut into GDP growth in the third quarter. The advance estimate for third quarter GDP growth is scheduled to be reported on October 26. (Figures for the quarter are likely to be skewed due to the effects of Hurricane Florence.)
The biggest factor in the larger August trade deficit was a 28% drop–about $1 billion–in soybean exports that reversed an increase in soybean exports earlier in the year as companies worked to beat the effects of the tariff war between the United States and China.
But August also saw a drop in U.S. exports to $209.4 billion due to lower sports of crude oil and an increase in imports to $262.7 billion on gains in consumer goods and automobile imports.