U.S. trade deficit rises in August

trade

WASHINGTON, (Reuters) - The U.S. trade deficit increased in August as imports of consumer goods surged to a record high, but the gap with China, a focus of the Trump administration’s “America First” agenda, narrowed.

The Commerce Department said on Friday the trade deficit rose 1.6% to $54.9 billion. The July trade gap was unrevised at $54.0 billion. Economists polled by Reuters had forecast the trade gap would widen slightly to $54.5 billion in August.

The politically-sensitive goods trade deficit with China fell 3.1% to $31.8 billion on an unadjusted basis, with imports declining 0.8%. Exports to China increased 8.0% in August, boosted by soybean shipments. The goods trade deficit with the European Union jumped 23.7% to $15.3 billion.

The United States and China have been embroiled in a 15-month trade war. Washington announced this week tariffs on aircraft, other industrial products and agricultural products from the EU as part of a World Trade Organization penalty award in a long-running aircraft subsidy case.

Trade experts expect the EU will impose tariffs on U.S. goods next year over subsidies for Boeing (BA.N).

In August, goods exports rose 0.3% to $138.6 billion. They were lifted by exports of soybeans, which rose $0.3 billion.

Exports of industrial supplies and materials increased $1.5 billion, with shipments of crude oil rising $0.8 billion. But capital goods exports fell $1.4 billion, with aircraft shipments declining $1.3 billion.

Goods imports increased 0.6% to $213.0 billion in August. The import bill was boosted by a $1.9 billion surge in capital goods imports to the highest on record. Cellphone imports rose by $1.1 billion.

When adjusted for inflation, the goods trade deficit rose $0.3 billion to $85.7 billion in August. Trade could remain a drag on gross domestic product in the third quarter.

Growth estimates for the third quarter range from as a low as a 1.3% annualized rate to as high as a 1.9% pace. The economy grew at a 2.0% pace in the second quarter, slowing from a 3.1% rate in the January-March period.