Tariffs backfire? US trade gap at 5-month high in July

World
Europe

03:32

The US trade deficit rose to a five-month high in July as exports of soybeans and civilian aircraft declined and imports hit a record high. Experts suggested the deterioration in the deficit could be a drag on American economic growth in the third quarter, continuing into the mid-term elections.

The US Commerce Department said the trade gap jumped 9.5 percent to 50.1 billion US dollars, widening for a second straight month.

Liu Zhiqin, a senior fellow at the Chongyang Institute for Financial Studies at Renmin University of China said, “The trade deficit will continue for a while, before the election, he (Donald Trump) can’t avoid such a problem. Only after the election, whether he can really enforce all the tariff policies, this is a big question and also a challenge for the US.”

The US trade deficit surged in July on record imports that created burgeoning gaps with trading partners in the crosshairs of President Donald Trump's aggressive tariff policies.

With US goods facing retaliatory tariffs in many countries, exports dropped sharply in July, pushing the trade deficit with China to an all-time high. The widely watched goods trade deficit with China surged 10 percent to a record 36.8 billion US dollars.

The widening deficits are contrary to the stated goals of Trump's multifront trade confrontations. Liu said that not only the international community but also business circles in America are strongly against tariffs. Therefore, he stressed that the Trump administration has to consider how to ease tensions with China and other countries and minimize the negative impact of the tariffs.