July Trade Deficit Up 9.5% to $50.1B
By Jeff Ferry, CPA Research Director
Wednesday’s trade report from the US Commerce Department for July reported that the US bilateral deficit with China hit a new all-time high of $36.8 billion in July, 9.5% worse than the July 2017 figure. For the first seven months of this year, our China deficit is running at $222.6 billion, 8.8% worse than the year-ago level.
“The Trump administration is doing the right things in taking on China, using tariffs to reduce US dependence on Chinese goods and working to get China to end its persistent intellectual property theft,” said CPA chairman Dan DiMicco.
The Coalition for a Prosperous America is a bipartisan coalition of manufacturers, labor unions, agricultural groups and other Americans focused on fixing US trade and rebuilding the US economy.
“After 20 years of large trade deficits, it takes time to turn trade around,” said CPA Research Director Jeff Ferry. “The current strong economic growth and rising consumer spending are driving up US imports faster than exports. Imports in some sectors have been boosted by hedge buying as US businesses accelerated their purchases to build stocks before the tariffs went into effect. The impending imposition of 25% tariffs on a further $200 billion of annual Chinese imports is the right move. Next, we need to see American producers seizing the opportunity and rebuilding US production to take the place of Chinese imports.”
The July deficit in total goods and services trade came in at $50.1 billion, 9.6% worse than June’s $45.7 billion. On a year-to-date basis, our trade balance is now at $337.9 billion, 7.0% worse than the comparable 2017 figure. On this basis, our 2018 trade balance is likely to come in at $591 billion, which would be our largest deficit since 2008.
Our goods deficit for July reached $73.1 billion, 6.1% worse than the June figure, and 11.8% worse than the year-ago July figure. Based on this year’s monthly data so far, our full-year 2018 goods deficit is heading for $866 billion.
The US non-oil goods deficit for July was $67.5 billion, $3.8 billion worse than June’s figure. On a year-to-date basis our non-oil deficit was $453.5 billion, 9.1% worse than the comparable 2017 figure. Our trade in oil and petroleum products is more volatile than other trade, and steadily improving as US petroleum production increases, so non-oil trade can provide a better picture of underlying trade trends.
The deficit in automotive vehicles and parts worsened by $300 million to $17.6 billion in July. For the first seven months of the year, our automotive deficit came in at $117.7 billion, $500 million worse than the total for the same period in 2017.
Skyrocketing Advanced Technology Deficit in July
Our deficit in Advanced Technology Products leapt to $13.2 billion, 42% worse than the June figure, and a shocking 61% worse than last July’s figure. On a year-to-date basis, our Advanced Tech deficit is at $67.8 billion, 32% worse than the year-ago figure. Advanced Technology Products include Internet technology and aerospace products and are widely viewed as the products and industries of the future. In July, China accounted for 35% of our Advanced Tech imports and 85% of our Advanced Tech trade deficit.
US Bilateral Deficits with Selected Nations
As described above, our bilateral goods deficit with China hit an all-time high in July at $36.8 billion. On current trends, our bilateral goods deficit with China is likely to hit $400 billion for the year, which would be an all-time high for a US bilateral deficit with any single nation.
Our second-highest bilateral deficit for July was with Germany, at $6.6 billion, 20% worse than a year ago. Next came Mexico at $5.5 billion deficit, 14.6% worse than last July. Japan was in fourth place, with a $5.5 billion deficit, 4.5% better than the year-ago figure.