US trade gap in July hits biggest in over a year on AI buildout

The US trade deficit in July hit its highest level in over a year, driven by a surge in imports as the country builds its AI technology sector, according to government data released Thursday. The trade gap widened to $88.6 billion, a 24.4% increase from the previous month, as exports of crude oil and gold fell while imports of tech products, including computers, semiconductors, and computer accessories, surged by 2.8%.

The deficit with Taiwan, a major chip manufacturer, reached a record $20.7 billion. While previous US tariffs targeting major economies have affected trade, officials have refrained from adding duties on semiconductors, computer chips, and other electronics. However, the administration is considering new tariffs on these products, with Commerce Secretary Howard Lutnick stating that targeted, thoughtful tariffs will be implemented.

In July, the US began imposing fresh duties on 60 trading partners following the Supreme Court's ruling to reinstate many of Trump's global tariffs. The US is also involved in a trade war with Canada, with the country's deficit narrowing in July after the US imposed a 50% duty on Canadian goods. Meanwhile, the ongoing conflict in the Middle East, which has blocked the Strait of Hormuz, has increased demand for US energy products but has also disrupted global supply chains.