US trade deficit narrows less than expected in July
The US trade deficit narrowed less than expected in July as the trade war between Washington and Beijing escalated, once again raising fears about domestic and global growth.
The Department of Commerce said on Wednesday that the gap between US imports and exports shrank by 2.7 per cent to $54bn in July to its narrowest level in three months. It stood at $55.5bn the previous month.
However, the July gap was still wider than the $53.5bn deficit that economists surveyed by Reuters had forecast.
“July’s jump in core exports followed a 3.7 per cent plunge in June, and the message from the 10-year low in the ISM export orders index is that the next few months are likely to see a serious rollover in exports,” said Ian Shepherdson, an economist at Pantheon Macroeconomics.
On Tuesday, data showed the Institute for Supply Management’s manufacturing gauge contracted for the first time in three years in August and new export orders sub-index fell to its lowest since 2009, when global trade was hit following the financial crisis.
The trade data come as tariffs imposed by the US and China on each other took effect on Sunday. Adding to the uncertainty has been reports that Chines and US officials are struggling to set a timetable for further trade talks this month.
President Donald Trump on Tuesday said “we are doing very well in our negotiations with China” and warned that he will get much tougher on Beijing if he is re-elected in 2020.
Wednesday’s report showed America’s goods trade deficit with China grew 9 per cent to $32.8bn. On a seasonally adjusted basis, the deficit fell 1.7 per cent to $29.6bn.