US Trade Deficit With EU, China Hits Record

The July trade deficit - a closed watched number in a time of trade wars - came in at $50.1BN, fractionally better than the $50.2BN expected, but 9.5% worse than last month's revised print of $45.7BN. This was the biggest one month move since 2015.

The deficit deteriorated as a result of less exports (-1.0%) and more imports (+0.9%). Broken down, July exports were $211.1 billion, $2.1 billion less than June exports, while July imports were $261.2 billion, $2.2 billion more than June imports. The July increase in the goods and services deficit reflected an increase in the goods deficit of $4.2 billion to $73.1 billion and a decrease in the services surplus of $0.1 billion to $23.1 billion.

Some notable highlights from the report:

  • July exports of services ($70.3 billion) were the highest on record.
  • July imports of goods and services ($261.2 billion) were the highest on record.
  • July imports of goods ($213.9 billion) were the highest on record.
  • July imports of services ($47.2 billion) were the highest on record.

Digging into the numbers, even more records were revealed:

  • July exports of industrial supplies and materials ($46.5 billion) were the highest on record.
  • July petroleum exports ($15.8 billion) were the highest on record.
  • July imports of goods ($212.2 billion) were the highest on record.
  • July imports of industrial supplies and materials ($49.3 billion) were the highest since December 2014 ($51.8 billion).
  • July imports of other goods ($9.0 billion) were the highest on record.
  • July petroleum imports ($20.3 billion) were the highest since December 2014 ($23.6 billion).
  • July imports from South and Central America ($10.8 billion) were the highest since December 2014 ($12.1 billion).
  • The July import average price per barrel of crude oil ($64.63) was the highest since December 2014 ($73.60).

But what was most important is the geographic distribution of trade, and this is where Trump will be displeased because in July the trade deficit with both China ($36.8 billion)...

... and the EU ($17.6 billion), were the highest on record.

While the number will not have much of an impact on Q3 GDP, it could have a major impact on future trade because if Trump wanted one final "sign" to slap China with $200BN of tariffs on Friday, he just got it.