AI data center demand for semiconductors, computers and telecommunications equipment drove the goods deficit to its highest level of the year – coming in at $136.57 billion for August, according to the Bureau of Economic Analysis on Tuesday.
To put that number into perspective, the revised July goods deficit was $123.80 billion. The $12.8 billion August widening is an import story. Capital goods imports rose $6.15 billion, led by semiconductors (up $2.39 billion) and industrial machinery (up $1.32 billion), and nonmonetary gold imports jumped $3.10 billion. Exports rose only $4.42 billion, held back by a $2.38 billion drop in pharmaceutical exports and a $0.99 billion drop in civilian aircraft.
Crude oil prices rose due to the war in Iran, and crude imports posted the largest month-over-month increase of any import line, up $3.32 billion to $15.35 billion. But the U.S. is a net petroleum exporter, and higher prices lift the export side too. Crude exports rose to $10.88 billion, and with surpluses in fuel oil, other refined products and natural gas, total petroleum exports rose by nearly as much as imports. The result is a petroleum balance that was essentially unchanged: a $9.43 billion surplus in August versus $9.51 billion in July. Oil moved the gross numbers, not the deficit.
On the chips side, the U.S. exported $7.79 billion worth of semiconductors but imported $15.42 billion in August. August import values were up over $2.3 billion from July import values. The U.S. is also seeing wide gaps in telecommunications equipment, such as wireless routers. The U.S. exported $4.65 billion worth of telecom equipment, similar to July numbers. But imports of telecommunications equipment for August came in at $15.9 billion. Although that gap is large, and indicative of some of the main items causing the trade deficit, it is not much different than July import values. When looked at over the course of the year to date, the U.S. imported $41.29 billion more worth of semiconductors than the same time in 2025, and $38.66 billion more in telecom equipment than the year before.
Computers and computer accessories tell a similar story about the trade deficit, too. Again, despite the monthly import values being relatively even month-over-month (computer imports at $34.16 billion and computer accessories import values at $25.19 billion), the year-to-date import values are up by $124.08 billion and by $68.99 billion, respectively, versus a year ago. The U.S. is also seeing a greater number of computer and computer accessories exports, but nothing compared to the volume of imports.
Despite the August boom in the trade deficit, the year-to-date deficit is $802.61 billion, which is less than the same period last year, but above the $768.21 billion in 2024. The U.S. recorded a $1.21 trillion goods deficit that year and a record $1.26 trillion in 2025. To break the 2025 record, the deficit would need to average $114 billion a month over the final four months of the year. The three-month moving average is already $120.78 billion, which would put 2026 at roughly $1.29 trillion; August’s pace would put it near $1.35 trillion.
Other major traded items – such as automotive and pharmaceuticals – saw substantial declines in values. For August, the U.S. imported $14.93 billion worth of passenger vehicles, down from $15.06 billion in July. The U.S. maintains an ongoing deficit in car exports, with August exports valued at $3.42 billion as most of the cars the U.S. produces are sold domestically.
Pharmaceutical imports used to top the value list, but that has been replaced by chips and computers and all things data center related. August import values were $14.8 billion, down from $16.0 billion in July. The pharma decline is a comparison against an inflated 2025, not weaker demand. Drugmakers rushed shipments in ahead of tariffs: pharmaceutical imports ran $205.93 billion through August 2025, roughly $25.7 billion a month, against $115.08 billion through August 2026, roughly $14.4 billion a month. The surge peaked in March 2025, when total consumer goods imports hit $101.63 billion versus about $57 billion in a normal month.
All told, import values for passenger cars year to date are down $10.32 billion from the same period last year. Commercial truck import values – a much smaller market by comparison to light, passenger vehicles – have also fallen on the year, down by $244 million. Pharma import values are down by $90.84 billion versus YTD 2025.
Country Trade Deficits
Despite the rising trade deficit, no single country saw a surprising rise in their surplus with the U.S. in August. This suggests that the deficit is caused by a handful of items that may, or may not, change a particular country’s deficit picture with the U.S.
Biggest deficit trading partners:
Country
August deficit
July deficit
2026 YTD deficit
Mexico
-$26.98 billion
-$26.31 billion
-$155.87 billion
Vietnam
-$25.04 billion
-$24.83 billion
-$163.90 billion
Taiwan
-$19.81 billion
-$20.66 billion
-$147.66 billion
China
-$18.40 billion
-$17.36 billion
-$109.62 billion
European Union
-$9.40 billion
-$11.10 billion
-$63.37 billion
The trade balance with the European Union is improving and the year-to-date deficit with China continues to tighten due to the imposition of tariffs beginning in 2018. However, it seems apparent that the rise of Vietnam, as well as the increase of China outsourcing partners in Southeast Asia, have made the China+1 strategy more evident. Vietnam has been the biggest beneficiary of that strategy, but other neighboring countries are rising and likely to pick off lower value manufactured goods from Vietnam as Vietnam starts to move up the industrial food chain.
When looking at the August trade deficit, the main import sources are Mexico, India, Southeast Asia, led by Vietnam, and the Pacific Rim countries. August trade data continues along the same trendlines: Vietnam as an obvious China alternative; Taiwan deficit boom caused by AI build-out; and, China and EU trade deficits tighten, as Mexico gains as a North American manufacturing center. Any removal of tariffs in those regions would likely lead to an even greater trade deficit in the months ahead.
“The data center build-out is moving the trade deficit. Capital goods imports are up $285 billion year to date, and nearly all of it is chips, computers and telecom gear from Taiwan, Mexico, Korea, and Southeast Asia. America is financing the largest industrial build-out in a generation and importing the hardware to do it,” said Andrew Rechenberg, senior economist for CPA. “The China trade deficit is down 25% this year, but the five big ASEAN economies now run a deficit with us nearly three times China’s size. Tariffs moved the supply chain; they haven’t yet moved it home. On current pace the 2026 goods deficit lands between $1.29 and $1.35 trillion, breaking last year’s record.”
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
Data Center Imports Push Monthly Trade Deficit To Another 2026 Record
AI data center demand for semiconductors, computers and telecommunications equipment drove the goods deficit to its highest level of the year – coming in at $136.57 billion for August, according to the Bureau of Economic Analysis on Tuesday.
To put that number into perspective, the revised July goods deficit was $123.80 billion. The $12.8 billion August widening is an import story. Capital goods imports rose $6.15 billion, led by semiconductors (up $2.39 billion) and industrial machinery (up $1.32 billion), and nonmonetary gold imports jumped $3.10 billion. Exports rose only $4.42 billion, held back by a $2.38 billion drop in pharmaceutical exports and a $0.99 billion drop in civilian aircraft.
Crude oil prices rose due to the war in Iran, and crude imports posted the largest month-over-month increase of any import line, up $3.32 billion to $15.35 billion. But the U.S. is a net petroleum exporter, and higher prices lift the export side too. Crude exports rose to $10.88 billion, and with surpluses in fuel oil, other refined products and natural gas, total petroleum exports rose by nearly as much as imports. The result is a petroleum balance that was essentially unchanged: a $9.43 billion surplus in August versus $9.51 billion in July. Oil moved the gross numbers, not the deficit.
On the chips side, the U.S. exported $7.79 billion worth of semiconductors but imported $15.42 billion in August. August import values were up over $2.3 billion from July import values. The U.S. is also seeing wide gaps in telecommunications equipment, such as wireless routers. The U.S. exported $4.65 billion worth of telecom equipment, similar to July numbers. But imports of telecommunications equipment for August came in at $15.9 billion. Although that gap is large, and indicative of some of the main items causing the trade deficit, it is not much different than July import values. When looked at over the course of the year to date, the U.S. imported $41.29 billion more worth of semiconductors than the same time in 2025, and $38.66 billion more in telecom equipment than the year before.
Computers and computer accessories tell a similar story about the trade deficit, too. Again, despite the monthly import values being relatively even month-over-month (computer imports at $34.16 billion and computer accessories import values at $25.19 billion), the year-to-date import values are up by $124.08 billion and by $68.99 billion, respectively, versus a year ago. The U.S. is also seeing a greater number of computer and computer accessories exports, but nothing compared to the volume of imports.
Despite the August boom in the trade deficit, the year-to-date deficit is $802.61 billion, which is less than the same period last year, but above the $768.21 billion in 2024. The U.S. recorded a $1.21 trillion goods deficit that year and a record $1.26 trillion in 2025. To break the 2025 record, the deficit would need to average $114 billion a month over the final four months of the year. The three-month moving average is already $120.78 billion, which would put 2026 at roughly $1.29 trillion; August’s pace would put it near $1.35 trillion.
Other major traded items – such as automotive and pharmaceuticals – saw substantial declines in values. For August, the U.S. imported $14.93 billion worth of passenger vehicles, down from $15.06 billion in July. The U.S. maintains an ongoing deficit in car exports, with August exports valued at $3.42 billion as most of the cars the U.S. produces are sold domestically.
Pharmaceutical imports used to top the value list, but that has been replaced by chips and computers and all things data center related. August import values were $14.8 billion, down from $16.0 billion in July. The pharma decline is a comparison against an inflated 2025, not weaker demand. Drugmakers rushed shipments in ahead of tariffs: pharmaceutical imports ran $205.93 billion through August 2025, roughly $25.7 billion a month, against $115.08 billion through August 2026, roughly $14.4 billion a month. The surge peaked in March 2025, when total consumer goods imports hit $101.63 billion versus about $57 billion in a normal month.
All told, import values for passenger cars year to date are down $10.32 billion from the same period last year. Commercial truck import values – a much smaller market by comparison to light, passenger vehicles – have also fallen on the year, down by $244 million. Pharma import values are down by $90.84 billion versus YTD 2025.
Country Trade Deficits
Despite the rising trade deficit, no single country saw a surprising rise in their surplus with the U.S. in August. This suggests that the deficit is caused by a handful of items that may, or may not, change a particular country’s deficit picture with the U.S.
Biggest deficit trading partners:
Country
August deficit
July deficit
2026 YTD deficit
Mexico
-$26.98 billion
-$26.31 billion
-$155.87 billion
Vietnam
-$25.04 billion
-$24.83 billion
-$163.90 billion
Taiwan
-$19.81 billion
-$20.66 billion
-$147.66 billion
China
-$18.40 billion
-$17.36 billion
-$109.62 billion
European Union
-$9.40 billion
-$11.10 billion
-$63.37 billion
The trade balance with the European Union is improving and the year-to-date deficit with China continues to tighten due to the imposition of tariffs beginning in 2018. However, it seems apparent that the rise of Vietnam, as well as the increase of China outsourcing partners in Southeast Asia, have made the China+1 strategy more evident. Vietnam has been the biggest beneficiary of that strategy, but other neighboring countries are rising and likely to pick off lower value manufactured goods from Vietnam as Vietnam starts to move up the industrial food chain.
When looking at the August trade deficit, the main import sources are Mexico, India, Southeast Asia, led by Vietnam, and the Pacific Rim countries. August trade data continues along the same trendlines: Vietnam as an obvious China alternative; Taiwan deficit boom caused by AI build-out; and, China and EU trade deficits tighten, as Mexico gains as a North American manufacturing center. Any removal of tariffs in those regions would likely lead to an even greater trade deficit in the months ahead.
“The data center build-out is moving the trade deficit. Capital goods imports are up $285 billion year to date, and nearly all of it is chips, computers and telecom gear from Taiwan, Mexico, Korea, and Southeast Asia. America is financing the largest industrial build-out in a generation and importing the hardware to do it,” said Andrew Rechenberg, senior economist for CPA. “The China trade deficit is down 25% this year, but the five big ASEAN economies now run a deficit with us nearly three times China’s size. Tariffs moved the supply chain; they haven’t yet moved it home. On current pace the 2026 goods deficit lands between $1.29 and $1.35 trillion, breaking last year’s record.”
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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