U.S. trade gap hits record with China and EU

NAFTA 2.0: How potential trade deal would impact workers, economy

WASHINGTON - The U.S. trade deficit widened for the second straight month in July, reaching the highest level since February, as imports hit an all-time high. The deficit in goods with China and the European Union set records.

The deficit rose despite efforts by President Donald Trump to bring it down by renegotiating trade agreements and imposing taxes on imports.

The Commerce Department said Wednesday the deficit in goods and services -- the difference between what America sells and what it buys from other countries -- rose to $50.1 billion in July from $45.7 billion in June. Exports slipped 1 percent to $211.1 billion. Imports increased 0.9 percent to a record $261.2 billion on increased purchases of trucks and computers.

The U.S. has already slapped tariffs on $50 billion in Chinese goods in a dispute over Beijing's aggressive efforts to challenge American technological dominance. The Trump administration is taxing imported steel and aluminum and may target auto imports next, causing a rift with the EU. Mr. Trump also has threatened to exclude Canada from a revamped North American Free Trade Agreement.

American industries feel impact of Trump's trade policies

So far, the president's aggressive policies have had little impact on the trade numbers. The goods deficit with China rose 10 percent in July to a record $36.8 billion. The gap with the EU shot up 50 percent to a record $17.6 billion and with Canada nearly 58 percent to $3.1 billion. The July deficit with Mexico, though, plunged 25 percent to $5.5 billion.

So far this year, the trade deficit is up 7 percent from January-July 2017.

Mr. Trump views trade deficits as a sign of economic weakness, caused by bad trade deals and abusive behavior by America's trading partners.

Mainstream economists blame persistent U.S. trade deficits on an economic reality that can't be changed much by trade policy: Americans spend more than they produce, and imports fill the gap. The strong U.S. economy is also encouraging Americans to buy more foreign products.

In July, the U.S. ran a deficit of $73.1 billion in goods such as cars and machinery, but it recorded a surplus of more than $23 billon in services such as education and banking.

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