Economy

U.S. trade deficit surges in July to highest in 12 years

U.S. trade deficit surges in July to highest in 12 years”

Canada's merchandise trade deficit was $2.45 billion in July as both imports and exports continued to post strong gains, but remained below pre-pandemic levels, Statistics Canada said Thursday.

The overall trade deficit rose by 18.9 percent to 63.6 billion dollars from a revised 53.5 billion dollars in June, according to the department. Exports were also up but by a smaller 8.1% to $168.1 billion. The increase in both imports and exports is a good sign in many ways, pointing to stronger consumer spending at home and increased demand for American-made goods overseas.

US exports rose by 8.1 percent to 168.1 billion USA dollars in July while imports increased by 10.9 percent to 231.7 billion dollars, the department said.

The overall increase in the trade deficit came as Canada's trade surplus with the United States increased to $2.9 billion in July compared with $2.7 billion in June.

U.S. President Donald Trump has long complained that the trade gap is a sign that other countries are taking advantage of the U.S.by sending more products to the U.S. than they buy from U.S. companies.

More news: Australia breaks 29-year growth streak and falls into recession

For July, the deficit with China in goods totalled US$31.6 billion, an 11.5 per cent increase from the June imbalance. Market expectations were for a trade deficit of about $2.5 billion, according to economists at Bank of Nova Scotia.

Canada sent 73.8% of all its goods exports to the United States in July. The U.S. surplus in services, such as banking and insurance, declined to $17.4 billion, the smallest services surplus since August 2012 and a reflection in part of the decline in airline travel during the pandemic.

Rubeela Farooqi, chief US economist at High Frequency Economics, says she expects the uncertainty to continue for a while yet.

Michael Pearce, senior US economist at Capital Economics, said he expected the rising deficit, which subtracts from USA growth, would cut the gross domestic product for the July-September quarter by about one percentage-point.



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