U.S. trade deficit widens to $105.6 billion in August as imports hit a record

The U.S. trade deficit widened for a second straight month in August, to $105.6 billion, as imports climbed to a record $420.8 billion, the Census Bureau and the Bureau of Economic Analysis said on Tuesday. The gap was $12.7 billion wider than in July and the largest since March 2025.

Economists had expected a deficit of about $102 billion. Exports rose too, by $4.5 billion to $315.2 billion, but imports increased by $17.2 billion, almost four times as much.

Goods drove the gap

Nearly all of the change came from physical goods. The goods deficit widened by $12.8 billion to $136.6 billion, while the surplus the U.S. runs in services such as travel, finance and licensing held steady at about $31 billion.

On the import side, industrial supplies rose $9.1 billion, led by crude oil, up $3.3 billion, and nonmonetary gold, up $3.1 billion. Capital goods, the machinery and equipment companies buy to expand, rose $6.2 billion, including $2.4 billion more in semiconductors. Imports of capital goods reached $146.4 billion, the highest on record.

Exports were lifted by industrial supplies, up $6.3 billion, as more gold, crude oil and fuel oil went abroad, and by a $1 billion rise in semiconductor shipments. Exports of pharmaceutical preparations fell $2.4 billion. Gold moved in both directions, which is one reason a single month can swing sharply; the government replaces most nonmonetary gold trade with a separate adjustment when it calculates gross domestic product.

Where the goods came from

After seasonal adjustment, the largest goods deficits were with Mexico at $27.7 billion, Vietnam at $24 billion, Taiwan at $18.3 billion and China at $16.4 billion. The gap with Canada widened by $4.1 billion to $7.1 billion. On an unadjusted basis, the government said the August deficits with Mexico and Vietnam were the largest on record, and imports from Mexico, Vietnam, Malaysia and Italy all reached record highs.

A volatile run, still below last year

The monthly figures have swung widely since early 2025 because of U.S. tariffs and, more recently, war-driven moves in crude oil prices. The deficit reached about $133 billion in March 2025, then narrowed, and from January through April of this year it held between $52.5 billion and $53.7 billion a month. Since then it has roughly doubled: $75.8 billion in May, $71.2 billion in June, $92.8 billion in July and $105.6 billion in August.

July's figure was itself revised wider, from the $88.6 billion first reported, mainly because goods imports were revised up by $4.4 billion.

Even after the recent jump, the deficit for the first eight months of 2026 was $138.2 billion, or 19.9%, smaller than in the same period of 2025. Over that span, exports were up 11.8% from a year earlier and imports 4.4%.

What it means for growth

Trade feeds into gross domestic product: exports add to it and imports subtract from it. Adjusted for inflation, the goods deficit rose 8.2% to $114.7 billion in August, compared with an 11.1% rise in the goods deficit before adjusting for inflation, so most of the widening reflected more goods arriving rather than higher prices alone.

On its own, that points to trade weighing on third-quarter growth, though part of the surge was equipment. Imported machinery is subtracted as imports, but it is also counted as business investment when companies buy it, so the net effect on growth is smaller than the trade line alone suggests. The September report, due Nov. 4, will complete the quarter.