The trade deficit rose 32.5% in July and imports were up 5.9%, but much of this can be attributed to importers bulking up on orders as the full brunt of the “Liberation Day” tariffs were set to start in August.
Many of the usual top import items showed no sign of big import swings month-over-month. Pharmaceutical imports, usually an import leader, fell to $16 billion from $17.1 billion. Passenger car imports fell to $14.2 billion from $15 billion. Automotive parts held relatively steady on the month – $11.8 billion worth of imports in July versus $11.5 billion in June. Pharmaceuticals are not subject to tariffs, but Section 232 tariffs exist for cars and car parts with the exception of USMCA-made vehicles, which have duty-free entry into the U.S. (unless they fail to meet agreed upon content requirements).
The overall trade deficit for July: $78.3 billion, up 32.5%, according to the Bureau of Economic Analysis. Import values rose 5.9% to $358.8 billion.
But the goods deficit, of course, is the real reason for the deficit, further demonstrating the dominant role of outsourcing and the strength of the dollar against the Mexican peso, Chinese yuan, Japanese yen and South Korean won, to name a few.
The January goods deficit looked like the record-breaking first quarter monthly deficits: $103.8 billion.
Year-to-date goods deficit: $839.6 billion, surpassing the $681.6 billion from Jan-July 2024.
The wild swings in comparisons between the monthly deficit and the three-month moving average is due to the April 2 “Liberation Day” tariff announcement. As tariff rates eventually become more certain, the deficit figures will more closely track the moving averages.
Thanks to massive tariff front-loading to fill warehouses in the first quarter, and again in July prior to the full brunt of International Emergency Economic Powers Act (IEEPA) tariffs kicking in, the U.S. is on par to post a minimum $1.16 trillion goods deficit. This number assumes a goods deficit of $65 billion per month for the next five months.
There is a lot of noise in the system right now. There is still a lot of policy uncertainty around tariffs, which ones will stick, which new ones are coming, and so anyone who is trying to make a declaration on what these numbers really mean for the tariff strategy will struggle to get it right. I think it is going to take a while longer to figure out what these trade numbers mean.
One of the biggest sources of the goods deficit in July was computers and telecommunications equipment – such as network routers. These are mostly all made in Asia, where IEEPA tariffs were going from a baseline of 10% to around 20%.
“In July, these retail focused tech importers were likely worried that the China deal would not get prolonged until November, or that other retaliatory tariffs were imminent. The items with the highest import surge were largely in the most import reliant sectors, like computers, where we have an approximate 80% import reliance,” said Andrew Rechenberg, an economist with CPA. “Those are also not things that are going to go bad in a warehouse. In June, most retaliatory tariffs were paused, and there was speculation that trade negotiations would lead to permanent agreements and tariff relief. But their attitude changed by July. Negotiations were much slower than previously indicated, and businesses became skeptical that many major trade deals would be finalized anytime soon. So they bet on importing and stockpiling while there was a retaliatory tariff pause, and they were right, for the most part,” he said.
The U.S. signed trade agreements with the U.K., European Union, Japan, South Korea, and India. These deals are all based on the IEEPA tariffs, currently waiting for the Supreme Court to decide whether they are legal or not. Last month, the U.S. Court of Federal Appeals ruled that they were illegal. If the IEEPA tariffs are removed, those trade deals will also have to be redone, meaning more trade uncertainty. Further highlighting the need for a long-term consistent trade policy, even if legislation is needed.
Deficits are rising. The main reason is due to confusion on tariffs leading to unusual surges. Despite the higher tariffs, the import increases we see should serve as a testimony to the on-going structural advantage imports hold over domestic production thanks to a stronger dollar, and decades of offshoring – whereas American companies large and small have either long relied on contract manufacturers abroad and never made their items at home, or have invested in factories overseas.
JULY IMPORT LEADERS
The following are the top imported goods for July by value.
Item
July
Monthly Change
YTD Imports 2025
YTD Imports 2024
Computers
$19.42 billion
+$1.46 billion
$109.46 billion
$66.19 billion
Pharmaceuticals
$16 billion
-$1.09 billion
$192.31 billion
$135.77 billion
Cars
$14.21 billion
-$821 million
$112.09 billion
$126.92 billion
Car Parts
$11.81 billion
+$303 million
$82.04 billion
$86.41 billion
Computer accessories
$10.72 billion
+$139 million
$80.75 billion
$53.86 billion
The biggest monthly changes came from computers and telecom equipment, which posted $922 million more in imports to $10.2 billion. After pharmaceuticals, computers saw the biggest surge in imports so far this year. Pharmaceuticals are exempt from tariffs for the time being. The industry is in the middle of a Section 232 investigation, which could lead to tariffs.
Lastly, commodity trades from July looked similar to June, with one exception: copper.
Section 232 copper tariffs of 50% began in August, but importers were preparing for higher tariffs in July. Copper imports were $2.4 billion in July, up $541 million from June.
CPA released a new report last week by its economics team titled, “How to Counter China’s National Security Threat to U.S. Copper Mills.” The report shows how the U.S. copper supply chain—vital to national defense, advanced manufacturing, and energy infrastructure—is under acute threat from China’s state-directed copper industry. The industry remains at a crisis point, and the situation is placing U.S. copper fabricators in an impossible situation that demands immediate action, such as the Trump Administration’s Section 232 investigations and tariffs on semi-finished copper and copper derivative products under the Trade Expansion Act.
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.
July Import Surge Another Case of Tariff Front-Loading as IEEPA Tariffs Double In August
The trade deficit rose 32.5% in July and imports were up 5.9%, but much of this can be attributed to importers bulking up on orders as the full brunt of the “Liberation Day” tariffs were set to start in August.
Many of the usual top import items showed no sign of big import swings month-over-month. Pharmaceutical imports, usually an import leader, fell to $16 billion from $17.1 billion. Passenger car imports fell to $14.2 billion from $15 billion. Automotive parts held relatively steady on the month – $11.8 billion worth of imports in July versus $11.5 billion in June. Pharmaceuticals are not subject to tariffs, but Section 232 tariffs exist for cars and car parts with the exception of USMCA-made vehicles, which have duty-free entry into the U.S. (unless they fail to meet agreed upon content requirements).
The overall trade deficit for July: $78.3 billion, up 32.5%, according to the Bureau of Economic Analysis. Import values rose 5.9% to $358.8 billion.
But the goods deficit, of course, is the real reason for the deficit, further demonstrating the dominant role of outsourcing and the strength of the dollar against the Mexican peso, Chinese yuan, Japanese yen and South Korean won, to name a few.
The January goods deficit looked like the record-breaking first quarter monthly deficits: $103.8 billion.
Year-to-date goods deficit: $839.6 billion, surpassing the $681.6 billion from Jan-July 2024.
Thanks to massive tariff front-loading to fill warehouses in the first quarter, and again in July prior to the full brunt of International Emergency Economic Powers Act (IEEPA) tariffs kicking in, the U.S. is on par to post a minimum $1.16 trillion goods deficit. This number assumes a goods deficit of $65 billion per month for the next five months.
One of the biggest sources of the goods deficit in July was computers and telecommunications equipment – such as network routers. These are mostly all made in Asia, where IEEPA tariffs were going from a baseline of 10% to around 20%.
“In July, these retail focused tech importers were likely worried that the China deal would not get prolonged until November, or that other retaliatory tariffs were imminent. The items with the highest import surge were largely in the most import reliant sectors, like computers, where we have an approximate 80% import reliance,” said Andrew Rechenberg, an economist with CPA. “Those are also not things that are going to go bad in a warehouse. In June, most retaliatory tariffs were paused, and there was speculation that trade negotiations would lead to permanent agreements and tariff relief. But their attitude changed by July. Negotiations were much slower than previously indicated, and businesses became skeptical that many major trade deals would be finalized anytime soon. So they bet on importing and stockpiling while there was a retaliatory tariff pause, and they were right, for the most part,” he said.
The U.S. signed trade agreements with the U.K., European Union, Japan, South Korea, and India. These deals are all based on the IEEPA tariffs, currently waiting for the Supreme Court to decide whether they are legal or not. Last month, the U.S. Court of Federal Appeals ruled that they were illegal. If the IEEPA tariffs are removed, those trade deals will also have to be redone, meaning more trade uncertainty. Further highlighting the need for a long-term consistent trade policy, even if legislation is needed.
Deficits are rising. The main reason is due to confusion on tariffs leading to unusual surges. Despite the higher tariffs, the import increases we see should serve as a testimony to the on-going structural advantage imports hold over domestic production thanks to a stronger dollar, and decades of offshoring – whereas American companies large and small have either long relied on contract manufacturers abroad and never made their items at home, or have invested in factories overseas.
JULY IMPORT LEADERS
The following are the top imported goods for July by value.
Item
July
Monthly Change
YTD Imports 2025
YTD Imports 2024
Computers
$19.42 billion
+$1.46 billion
$109.46 billion
$66.19 billion
Pharmaceuticals
$16 billion
-$1.09 billion
$192.31 billion
$135.77 billion
Cars
$14.21 billion
-$821 million
$112.09 billion
$126.92 billion
Car Parts
$11.81 billion
+$303 million
$82.04 billion
$86.41 billion
Computer accessories
$10.72 billion
+$139 million
$80.75 billion
$53.86 billion
The biggest monthly changes came from computers and telecom equipment, which posted $922 million more in imports to $10.2 billion. After pharmaceuticals, computers saw the biggest surge in imports so far this year. Pharmaceuticals are exempt from tariffs for the time being. The industry is in the middle of a Section 232 investigation, which could lead to tariffs.
Lastly, commodity trades from July looked similar to June, with one exception: copper.
Section 232 copper tariffs of 50% began in August, but importers were preparing for higher tariffs in July. Copper imports were $2.4 billion in July, up $541 million from June.
CPA released a new report last week by its economics team titled, “How to Counter China’s National Security Threat to U.S. Copper Mills.” The report shows how the U.S. copper supply chain—vital to national defense, advanced manufacturing, and energy infrastructure—is under acute threat from China’s state-directed copper industry. The industry remains at a crisis point, and the situation is placing U.S. copper fabricators in an impossible situation that demands immediate action, such as the Trump Administration’s Section 232 investigations and tariffs on semi-finished copper and copper derivative products under the Trade Expansion Act.
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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