The U.S. trade deficit spiked to $63.6 billion during the month of July, a rate not seen since the Great Recession in 2008, according to data released Thursday by the Commerce Department.
Imports since June increased by $22.7 billion, while exports only increased by $12.6 billion — an 18.9 percent increase in one month.
The deficit is dictated by the number of goods the U.S. purchases from other countries, compared to the amount of U.S. goods sold abroad.
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“Exports and imports increased in July but remained below pre-pandemic levels, reflecting the ongoing impact of COVID-19, as many businesses continued to operate at limited capacity or ceased operations completely, and the movement of travelers across borders remained restricted,” the department said Thursday.
Though a large deficit is not necessarily a sign of a weak economy, President Trump campaigned on reducing the trade deficit, particularly in regards to the U.S. trade deals with Mexico and Canada.
Trump revised the original North American Free Trade Agreement, which he deemed the “worst trade agreement ever,” and replaced it with the United States–Mexico–Canada Agreement, or USMCA.
The U.S. ran a record monthly high deficit in goods with Mexico, which increased from $2.5 billion to $11.5 billion in July.
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although the deficit in goods with China ran higher, totaling $31.6 billion.
Altogether, the United States had a record-high monthly deficit in goods of $80.1 billion.
The lowest services surplus since August 2012 was recorded in July, which was likely due to a lack in airline travel, again as a result of the coronavirus.
Although the increase in deficit was not a shock to economists, experts reportedly did not anticipate the level of deficit seen in July.
The coronavirus has largely disrupted international trade and supply chains, attributing to the drop in economic growth. Though economists are hopeful the economy will rebound, the likihood of it happening quickly is slim as the coronavirus remains a threat worldwide.
“A strong and sustained rebound in trade flows is uncertain given a still weak global growth and demand backdrop,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics told the Associated Press on Thursday.
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Although the U.S. maintained trade deficits with nations like Canada, China, the European Union, India, Japan and Mexico, they managed to hold a trade surpluses with South and Central America, Hong Kong, the United Kingdom and Saudi Arabia.
The Associated Press contributed to this report.