US Trade Deficit Widens to $105.6 Billion in August as Imports Surge

The U.S. trade deficit grew more sharply than expected in August as businesses brought in more goods from abroad to meet strong demand at home, according to Commerce Department figures released Tuesday.

The overall shortfall rose 13.7% from the prior month to $105.6 billion. Economists surveyed by Reuters had expected a gap of about $102.0 billion.

Imports outpaced exports

Total imports climbed 4.3% to $420.8 billion, led by a 5.3% increase in goods imports to $342.2 billion. Exports increased 1.4% to $315.2 billion, with goods exports up 2.2% to $205.7 billion.

The wider gap arrived even as tariffs intended to narrow the deficit remained in place. Analysts noted that companies have leaned on foreign supply to satisfy customers, rather than pulling back.

What it means for growth

Demand inside the United States had expanded at its fastest pace in more than three and a half years during the second quarter, helped by consumer spending and business investment in equipment, much of it tied to artificial intelligence. Government data for August pointed to continued strength in spending and in orders for nondefense capital goods excluding aircraft.

Trade has weighed on gross domestic product for three consecutive quarters. Economists cited by Reuters estimated the drag could reach as much as 2.5 percentage points in the third quarter. Even so, most forecasts for July through September still put growth above a 3.0% annual rate, with household spending expected to offset the import effect. The economy expanded at a 2.2% pace in the second quarter.

Reporting based on coverage by Reuters.