July Increase in U.S. Imports Outweighs Increase in Exports
The United States’ international trade deficit widened through the month of July as the country imported more goods than it exported. According to the latest trade data shared by the U.S. Department of Commerce, America’s international trade deficit grew by 1.7% in July, compared to June.
U.S. imports outweighed exports by $65.1 billion, which was $1.1 billion higher than the figure recorded in June ($64.o billion). Exports and imports both declined in July. The decline in exports, however, was larger than the decline in imports, causing the trade deficit to widen.
In July, America exported $127.1 billion worth of goods, which is $1.6 billion less than those exported in June. Meanwhile, imports amounted to $192.2 billion in July, just $500.0 million less than the imports in June.
When we break down the imports and exports by category, we find a significant decline in trade activity for automobiles and consumer goods, followed by industrial supplies.
On a seasonally adjusted basis, America exported eight percent fewer automobiles in July, compared to in June, which is a decline of 0.4% in export activity year-over-year. Imports of automobiles were also down by 2.8% in July, implying that America was both buying and selling fewer cars.
The trade data coincides with the Federal Reserve’s industrial production data posted earlier this month. It revealed that U.S. manufacturing dropped in July, primarily because of a dip in the output of auto manufacturers.
American automakers have been cutting back on production after witnessing an inventory glut following declining demand. The American auto industry is facing a slowdown this year, after posting rallying sales numbers through 2016.
Similarly, exports of consumer goods dropped by 4.5% from June to July, while exports of industrial supplies (including petroleum and petroleum products) fell by 1.1%. Similar drops were likewise seen in imports. However, the overall effect of declining exports weighed down heavily on the net trade figures.
A growing trade deficit is a burden on the country’s national exchequer and puts a dent in the country’s GDP numbers. Simply put, a widening gap between imports and exports is bad news for the economy.
“Monthly Advance Economic Indicators Report, July 2017,” U.S. Census Bureau, August 28, 2017.