President Donald Trump‘s aggressive use of tariffs to shrink the U.S. trade gap is falling short, as fresh data show the trade deficit just hit its worst monthly level since March despite rising duties on foreign goods.
In July, U.S. goods and services trade deficit widened to $78.3 billion, up from $59.1 billion in June, according to the Bureau of Economic Analysis.
That was worse than economists' expectations of a $75.7 billion shortfall and marked the largest monthly trade gap since March 2025.
The trade deficit is now virtually unchanged from a year ago, signaling that Trump's tariffs—aimed at cutting imports and protecting American industries—have yet to yield meaningful results.
Chart: US Trade Deficit Remains Deep In The Red
Imports Surge While Export Growth Stalls
The worsening U.S. trade gap in July was driven almost entirely by a sharp rise in imports, which climbed 5.9% from June to $358.8 billion, while exports rose a modest 0.3% to $280.5 billion. Exports of goods increased by just $0.2 billion to $179.4 billion.
Gains were led by nonmonetary gold, which rose by $2.9 billion, along with computer accessories and civilian aircraft, which increased by $0.9 billion and $0.7 billion, respectively.
On the services side, exports rose $0.6 billion to $101.0 billion, driven by stronger revenues from charges for the use of intellectual property and government-related goods and services.
However, declines were seen in categories such as finished metal shapes, which fell by $2.5 billion, and excavating machinery, down $1.5 billion.
On the import side, the story was markedly different. Imports of goods soared by $18.4 billion to reach $283.3 billion, with major increases across several product categories.
Purchases of nonmonetary gold surged $9.6 billion, while industrial supplies and materials added another $12.5 billion. Imports of computers and telecommunications equipment also increased, up $1.5 billion and $0.9 billion, respectively. Yet not all categories saw gains.
The U.S. imported fewer semiconductors, passenger cars and pharmaceutical preparations, which fell by $0.8 billion, $0.8 billion, and $1.1 billion, respectively. Imports of services also rose, increasing $1.7 billion to $75.5 billion, largely on the back of higher travel and transport activity.
Which Countries Are Driving The Deficit?
The largest contributors to the U.S. trade deficit in July included Mexico, with a shortfall of $16.6 billion, followed by Vietnam at $16.1 billion, China at $14.7 billion, and Taiwan at $13.5 billion.
Deficits were also substantial with other trading partners. The European Union posted an $8.6 billion gap, India ran a $5.5 billion deficit, and Canada followed closely at $5.4 billion.
A notable development came from the widening deficit with China, which increased by $5.3 billion compared to June. U.S. imports from China surged to $24.7 billion, while exports remained flat at $10.0 billion.
The deficit with Switzerland also spiked significantly, jumping from nearly zero to $7.7 billion, as imports rose $6.5 billion—primarily driven by gold-related transactions—while exports fell by $1.2 billion to $2.9 billion.
The U.S. posted trade surpluses with a few regions. The Netherlands showed a positive balance of $4.8 billion, South and Central America contributed a $4.6 billion surplus, and Hong Kong added $1.9 billion to the plus side of the ledger.
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