U.S. trade deficit narrows slightly to $70.1 billion in July

<p><p>The U.S. trade deficit narrowed slightly to $70.1 billion in July as economic recovery overseas helped boost American exports while imports declined.</p></p><p><p>The Commerce Department reported Thursday that the trade deficit fell 4.3% in July after surging to a record $73.2 billion in June.</p></p><p><p>The trade deficit represents the gap between what the country exports to the rest of the world and the imports it purchases from other countries.</p></p><p><p>In July, exports jumped 1.3% to $212.6 billion, reflecting revived overseas demand, while imports edged down a slight 0.2% to $282.9 billion.</p></p><p><p>The politically sensitive goods deficit with China rose 2.9% in July from June to $28.6 billion and totals $187.2 billion through the first seven months of this year, up 15% from the same period a year ago.</p></p><p><p>As usual, the trade deficit with China was the largest U.S. deficit with any country.</p></p><p><p>Donald Trump targeted what he saw as China’s unfair trade practices during his presidency, triggering a trade war between the world’s two largest economies, with China retaliating to America’s punitive tariffs by raising its own tariffs on American products, most notably on soybeans.</p></p><p><p>President Joe Biden has so far not indicated how he plans to deal with the economic tensions between the two nations.</p></p><p><p>So far this year, the U.S. trade deficit totals $141.7 billion, 6% below the total for the same period last year.</p></p><p><p>The deficit for all of 2020 was $676.7 billion, 17.4% higher than in 2019.</p></p><p><p>Economists believe that deficits for the rest of this year should moderate as the surge in consumer demand after the country re-opened will slow, reducing demand for foreign goods, while U.S. exports should continue rising as overseas economies recovery.</p></p><p><p>However, analysts caution that a lot will depend on the path of the COVID cases in coming months both in the United States and abroad.</p></p><p><p>“The pandemic will continue to pose a downside risk to trade flows, but we expect a gradual normalization in trade dynamics as vaccinations increase and supply disruptions slowly ease,” said Mahir Rasheed, U.S. economist at Oxford Economics.</p></p><p><p>The deficit in goods totaled $87.7 billion in July, down from a $93.3 billion goods deficit in June.</p></p><p><p>The U.S. surplus in services, which has been hurt this year by weakness in air travel, fell to $17.7 billion in July, down from a services surplus of $20 billion in June.</p></p><p><p>However, a big part of the decline in July reflected stronger imports of services which reflected the payments NBC made to cover the summer Olympics in Tokyo.</p></p>