The US trade deficit in goods has expanded strongly in July after collapse of the agricultural goods exports. This suggests that trade is likely to have a very negative impact on the growth of the economy in the third quarter.
The trade ministry said that the trade deficit in goods grew by 6.3% on a monthly basis to 72.2 billion USD in July. The exports of goods shrank to 140.0 billion USD, as a result of a 6.7% monthly decline in food and beverage supplies.
This probably reflects the continued changes in soybean exports after the farmers made preliminary supplies of raw materials in April and May to China before the Beijing reciprocal customs duties came into force in early July. The US and China are actively engaged in a trade war, imposing reciprocal duties.
Last month, there was also a drop in capital and consumer goods exports, although the export of motor vehicles grew. The imports of goods increased by 0.9% to 212.2 billion USD in July on a monthly basis, supported by imports of food products, industrial supplies and capital goods.
There is also an increase in imports of motor vehicles, although the imports of consumer goods have shrunk.
The US government announced last month that trade contributed 1.06 percentage points for the annual growth rate of the economy from 4.1% in the second quarter.
Although trade is expected to slow economic growth, it will still remain stable for the July-September quarter.