The U.S. trade deficit ballooned to its highest level in four months this July, as businesses scrambled to import goods ahead of sweeping new tariffs imposed by the Trump administration, according to fresh data released on September 4, 2025, by the Commerce Department and Bureau of Economic Analysis. The goods and services deficit soared 32.5 percent to $78.3 billion, up sharply from a revised $59.1 billion in June, marking the worst monthly gap since March and catching many forecasters off guard.
Imports surged 5.9 percent to $358.8 billion, while exports inched up just 0.3 percent to $280.5 billion. This stark imbalance was fueled by a complex mix of policy anticipation, global economic jitters, and shifting business strategies. The lion’s share of July’s import increase came from a rush to buy gold before steep tariffs on Switzerland took effect. As a result, the U.S. trade deficit with Switzerland swelled by $7.6 billion in a single month, with gold-related imports from Switzerland alone rising $6.5 billion, as reported by Benzinga.
Matthew Martin, a senior economist at Oxford Economics, explained to AFP, “While imports bounced back in July, more than half of the increase was due to gold as trade policy and safe-haven demand brought about a resurgence in trade.” He further noted, “Excluding gold, imports rose by a more modest 3.3 percent, while exports fell 0.1 percent.”
The trade deficit with China also widened significantly, growing by $5.3 billion to reach $14.7 billion in July. Imports from China surged to $24.7 billion, while U.S. exports to China remained flat at $10.0 billion. Martin observed, “Unsurprisingly, given the level of tariffs, China has been the hardest hit of all trading partners.” This comes as Chinese goods now face an additional 30 percent tariff, while other Asian nations contend with lower rates.
Other major contributors to the July deficit included Mexico ($16.6 billion), Vietnam ($16.1 billion), and Taiwan ($13.5 billion). The U.S. also ran substantial deficits with the European Union ($8.6 billion), India ($5.5 billion), and Canada ($5.4 billion), according to Benzinga’s analysis of the Commerce Department data. Conversely, the U.S. posted trade surpluses with the Netherlands ($4.8 billion), South and Central America ($4.6 billion), and Hong Kong ($1.9 billion).
The July rebound in trade activity offered only a brief reprieve for U.S. exporters, who have faced months of volatility triggered by President Trump’s aggressive tariff strategy. Initially, a 10 percent tariff on most trading partners was introduced in April, but plans to raise these levies were postponed twice before finally taking effect in early August. The new tariffs now range from 10 to 50 percent and impact dozens of countries, including key allies such as the European Union, Japan, and India.
Pantheon Macroeconomics analysts described the widening shortfall as the result of “another wave of pre-tariff stockpiling.” Businesses, anticipating higher costs once the new tariffs kicked in, rushed to bring in goods ahead of the August 7 deadline. This front-loading of imports led to a temporary spike in trade activity but is expected to leave companies running low on existing stocks soon, forcing them to face higher costs when placing new orders. According to the Commerce Department, the year-to-date goods and services deficit is now up 30.9 percent from the same period in 2024, with imports rising 10.9 percent and exports up 5.5 percent.
Strong demand for capital goods linked to artificial intelligence and data centers also played a role in pushing up imports, as noted by Oxford Economics. The Commerce Department highlighted that inflows of industrial supplies and consumer goods both rose strongly. Imports of computer accessories increased by $0.9 billion, and civilian aircraft imports rose by $0.7 billion. On the services side, exports grew by $0.6 billion to $101.0 billion, driven by stronger revenues from charges for the use of intellectual property and government-related goods and services.
Yet, not all import categories saw gains. The U.S. imported fewer semiconductors, passenger cars, and pharmaceutical preparations, which fell by $0.8 billion, $0.8 billion, and $1.1 billion, respectively. Auto imports declined under a 25 percent tariff on foreign vehicles, and pharmaceuticals dipped after months of stockpiling. However, imports of services increased by $1.7 billion to $75.5 billion, largely due to higher travel and transport activity.
President Trump has repeatedly described the trade deficit as a national emergency and claimed his policies have cut it in half. However, as the New York Times and other outlets have pointed out, economists caution that the deficit tends to widen when the U.S. economy is strong and Americans can afford to buy more foreign goods. In downturns, the deficit often narrows, not necessarily as a sign of policy success, but because of weaker consumer demand.
Analysts warn that the latest surge in imports—while providing a short-term boost to trade volumes—could have longer-term consequences for the U.S. economy. The increased imports and resulting trade deficit may lead to higher prices for consumers and disruptions in manufacturing supply chains as businesses adjust to the new tariff landscape. The Trump administration’s tariffs have already rattled global supply chains, with import surges recorded as early as March, before the wide-ranging duties began in April. In addition to general tariffs, Washington has imposed separate charges on steel, aluminum, and automobiles, with the White House signaling that more measures could still be on the horizon.
For now, the impact on broader U.S. inflation remains limited, but economists expect that as companies exhaust their pre-tariff inventories, higher costs will begin to filter through to consumers. A Briefing.com poll of forecasters had expected the deficit to come in much smaller, at $64.2 billion, underscoring the surprise scale of July’s gap.
The Commerce Department will release the August trade data on October 7, and all eyes are on whether the pattern of surging imports ahead of new tariffs will continue—or if the full brunt of higher duties will finally begin to slow trade flows and shrink the gap. For now, the data tells a clear story: tariffs have yet to deliver the shrinking deficit promised by the administration, and the world’s largest economy remains deeply entwined with its global trading partners, for better or worse.
As policymakers, businesses, and consumers brace for the next round of trade data, the July figures stand as a vivid reminder of the unpredictable ripple effects that tariffs and trade wars can unleash—on balance sheets, supply chains, and everyday prices alike.
