The U.S. trade deficit widened more than expected in August. The imbalance stood at $54.9 billion at the end of the month, up 1.6 percent from $54 billion in July. That was higher than the $54.5 billion estimated by economists. When compared to the same period last year, the overall trade deficit was up $28.3 billion, or 7.1 percent.
Exports dropped slightly and imports spiked. Imports rose to $262.8 billion, higher than estimates of $261.4 billion. Exports increased to $207.9 billion, higher than expectations of $207.4 billion. Exports and imports of goods account for about three-fourths of America’s total trade.
Consumer goods imports were $57.2 billion, while exports of capital goods were $44.3 billion, the lowest since October 2017. Auto exports grew $14.3 billion to their highest level since July 2014. The petroleum deficit hit $300 million, the lowest on record.
Analysts have pointed to a looming round of tariffs against China and the European Union as a big factor in the results. Companies tend to import more before announced tariffs take effect. The last round of tariffs went into effect on Sept. 1, with others set to rise or take effect on Oct. 15 and Dec. 15.
Imports and exports with China have declined significantly since the trade war began in 2018. On a year-over-year basis, the shortfall with China is $231.6 billion, an 11.4 percent decline from the same period in last year. China is now the third-largest U.S. trading partner behind Mexico and Canada. It was No. 1 in 2018.
The trade gap also closed across much the EU. The EU deficit fell 23.7 percent from August, even though it is up 8.1 percent from a year ago. The deficit with Germany was the highest on record at $7.1 billion, due in part to a record $12.1 billion of imports.