US Trade Deficit Surges to $88.6 Billion in July Driven by AI Boom and Semiconductor Imports

U.S. Trade Gap Ballooned in July

Ana Swanson covers international trade and reported from Washington. The U.S. trade deficit in goods and services grew to the biggest gap in 16 months in July, as America imported more electronics to feed the country's artificial intelligence boom. The monthly trade deficit, the gap between what the United States imports and what it exports, hit $88.6 billion in the month, according to data the Commerce Department released on Thursday. That was an increase of more than 24 percent compared with June. Imports grew 2.8 percent from the previous month, to $399.3 billion, driven by surging imports of computers, computer accessories and semiconductors. U.S. exports fell 2.1 percent compared with June, hitting $310.7 billion, as the United States exported less gold and crude oil. President Trump has imposed steep tariffs on foreign goods in an effort to reduce the trade deficit, which he sees as a sign of America's manufacturing weakness. The Supreme Court struck down many of Mr. Trump's global tariffs in February, but he has turned to other laws to replace them. In July, the administration put a new round of tariffs on more than 80 countries, and it is considering placing another round of tariffs on more than 40 countries in the coming weeks. So far, the goods and services deficit is down a little from the pre-Trump era, but not by much. That's due in large part to surging imports of expensive chips, electronics and other supplies needed to construct new data centers. The U.S. trade deficit with Taiwan, a major manufacturer of chips, hit a record $20.7 billion in July, while deficits with Mexico, Vietnam, Thailand and South Korea also climbed. Wary of slowing data center construction, the administration has exempted chips, smartphones and other electronics from its tariffs for more than a year. Administration officials say that tariffs on chips are coming soon, but they are widely expected to contain significant carve outs for companies that are building new chip facilities in the United States. The war in Iran has also affected trade this year, as the closure of the Strait of Hormuz scrambled supply chains for oil, fertilizer, product packaging and helium.

US trade gap in July hits biggest in over a year on AI buildout

The US trade deficit in July widened to its largest since March 2025, government data showed Thursday, as imports climbed on the back of the booming AI tech build-out. But the trade deficit in the world's biggest economy grew to $88.6 billion in July -- a 24.4 percent increase from the month prior -- as exports of crude oil and gold fell while imports of tech products jumped. Washington: The US trade deficit in July widened to its largest since March 2025, government data showed Thursday, as imports climbed on the back of the booming AI tech build-out. US trade has seen wide fluctuations since President Donald Trump returned to the White House last year and rolled out sweeping tariffs on allies and competitors, in efforts to narrow the trade gap. But the trade deficit in the world's biggest economy grew to $88.6 billion in July -- a 24.4 percent increase from the month prior -- as exports of crude oil and gold fell while imports of tech products jumped. Exports dipped 2.1 percent to $310.7 billion, the Department of Commerce said. Imports rose 2.8 percent to $399.3 billion, bolstered by computers, computer accessories and semiconductors. The US deficit with Taiwan, a major manufacturer of chips, reached a record $20.7 billion for the month. US trade gaps with Mexico, Thailand, South Korea and Malaysia for the month also hit their highest on record. While Trump's tariffs have hit economies representing the majority of US trade, American officials have been careful to exempt products like chips, smartphones and other types of electronics. Washington is looking to develop new tariffs on semiconductors, Commerce Secretary Howard Lutnick told CNBC Wednesday, although adding that tech giants are aware of the Trump administration's plans. "What you're going to see is targeted, thoughtful tariff policy that basically says if you build here, you don't pay," Lutnick said. Over the past year, businesses have scrambled to step up imports before new waves of US duties kicked in. Although the US Supreme Court struck down many of Trump's global tariffs in February, officials in July replaced them with fresh duties targeting 60 trading partners. A separate trade investigation taking aim at 16 partners including China, the European Union and Taiwan, could lead to a further round of tariffs. The United States meanwhile is engaged in a trade war with neighboring Canada, with which its deficit narrowed in July. Last month, Trump slapped a 50-percent duty on billions of dollars in Canadian goods, prompting Ottawa's planned retaliation. Also weighing on trade flows is fallout from the Middle East war, with Iran largely blocking off the Strait of Hormuz -- a key waterway for global energy and fertilizer transit. This has helped to raise demand for US energy products but US firms have been grappling with snarled supply chains.