The US trade deficit jumped to $105.6 billion in August, a 13.8% increase from July’s revised $92.8 billion and the widest gap since early 2025, the Commerce Department reported Tuesday. Imports rose 4.3% to $420.8 billion, while exports rose just 1.4% to $315.2 billion.
The timing is notable. August was the first month after a new phase of tariffs took effect in late July, including a 10% tariff on top allies such as the European Union and a 12.5% tariff on other nations, including China. Importers also kept bringing in components for AI data centers. Semiconductor imports rose $2.4 billion, though computer accessory imports fell $1.6 billion, leaving overall AI-related imports little changed from July but still elevated.
A more significant driver was industrial supplies. Crude oil imports jumped $3.3 billion and nonmonetary gold imports rose $3.1 billion. The oil figure comes as crude prices have stayed elevated through the Iran conflict, and the gold figure arrives in a year when precious metals have rallied. The surge in goods imports lifted the goods deficit to $136.6 billion, while the services surplus stayed essentially flat.
Mexico remained the largest deficit at $27.7 billion. The gap with Canada widened by $4.1 billion to $7.1 billion in the month talks between the two countries collapsed and new 50% tariffs took effect, a dispute in which crude oil was left out of the tariffs. The deficit with China rose to $16.4 billion from $15.2 billion in July. That was before a visit by Chinese President Xi Jinping, which extended the current trade truce by two months, set a new early 2027 deadline for talks, and produced tariff cuts on an estimated $60 billion worth of goods.
The widening gap matters for growth. One forecasting firm said the jump in imports suggests third-quarter GDP growth will come in well below its 4.0% forecast, possibly closer to 2.5%, noting that the rise in goods imports was broad-based and left net trade as a drag overall. Imports subtract from GDP in the national accounts, so a surge can lower headline growth even when it reflects strong demand.
The next trade report will show whether August’s jump was a one-month surge or the start of a new run higher, and the early 2027 China deadline sets the next hard date for trade policy. Until then, a deficit above $100 billion suggests demand for imported goods remains strong even with higher tariffs in place.
For small and microcap investors, the report is a reminder that trade policy remains a live cost variable. Smaller manufacturers and importers have less room than multinationals to absorb tariff-driven input costs or reroute supply chains, though the extended China truce and announced tariff cuts offer some relief. Russell 2000 companies earn most of their revenue at home, so growth data matter as much as trade headlines, and a third-quarter GDP reading nearer 2.5% than 4.0% would feed into how investors read the Fed’s path after September’s rate hike.