U.S. Trade Deficit Drops to $41.9B in July

The U.S. trade deficit fell in July to the lowest level in five months, as exports posted a small gain while imports declined, reflecting a big drop in shipments of consumer goods such as cellphones.

The deficit narrowed to $41.9 billion in July, a 7.4 percent decline from a June imbalance of $45.2 billion, the Commerce Department reported Thursday. Exports were up a small 0.4 percent to $188.5 billion, helped by stronger sales of U.S.-made autos and machinery, while imports declined 1.1 percent to $230.4 billion.

So far this year, the deficit is running 3.6 percent above last year’s level, reflecting weaker export sales.

A sharp slowdown in China has roiled financial markets in recent weeks as investors have grown concerned that weakness in the world’s second-largest economy could have a more adverse impact on global growth.

The International Monetary Fund said Wednesday that China’s slowdown, volatile financial markets and falling raw-materials prices could lead to a “a much weaker outlook” for global growth. China’s troubles have sent the prices of raw materials such as oil and copper down sharply, increasing the economic problems of Brazil, Russia and other commodity exporters.

The July trade report showed that America’s deficit with China rose 0.4 percent in July to $31.6 billion, the highest level in nine months. So far this year, the U.S. deficit with China is running 8.5 percent higher than last year, and is on track to record another annual record. America’s trade gap with China is the largest with any country.