U.S. August trade deficit largest since March last year ... AI and tariffs to blame

[Financial News]  

The U.S. trade deficit in August reached its highest level since March last year. Imports hit a record, driven by imports of products needed to build AI infrastructure and uncertainty over President Donald Trump’s import tariffs.

According to the U.S. Commerce Department on the 6th (local time), imports surged 4.3% in August from the previous month, sending the trade deficit soaring 13.7% in a month to $105.6 billion (about 141 trillion won). That was far above the market forecast of $102 billion.
This was the largest deficit since March last year, just before President Trump announced sweeping reciprocal tariffs on “Liberation Day.”
For the year to date, however, the trade deficit stood at $138.2 billion, down nearly 20% from the same period a year earlier.
Exports rose 1.4% to $315.2 billion, while imports surged 4.2% to $420.8 billion.

The main reason imports hit a record was investment in AI infrastructure.
As U.S. companies ramped up investment in AI-related infrastructure, demand for semiconductors and various types of equipment surged. Imports of industrial supplies rose by $9.1 billion, while capital goods imports increased by $6.2 billion, led by semiconductors and other industrial machinery.
By country, the largest trade deficit was with Mexico, followed by Vietnam, Taiwan, China, the European Union (EU), South Korea, Canada and India. In particular, as Trump engaged in a fierce standoff with Canadian Prime Minister Mark Carney, the U.S. trade deficit with Canada widened sharply, from $4.1 billion the previous month to $7.1 billion. The increase was attributed to companies rushing shipments after it was decided, following difficult trade negotiations with Canada, that an additional 50% tariff would be imposed on some Canadian products starting August 22.

Nationwide economist Oren Klachkin told CNBC that “higher prices exaggerated the size of the deficit,” but added that “the trade deficit is still a drag on third-quarter GDP growth.” He also said the large deficit “was driven by strong domestic demand, not a weak economy.”
Imports are subtracted when calculating GDP. However, when demand and consumption are strong, other components can offset this subtraction.
Goldman Sachs, however, lowered its forecast for U.S. GDP growth in the third quarter by 0.3 percentage points to 3.1%, reflecting the August trade deficit.
GDPNow, the Atlanta Federal Reserve Bank’s real-time GDP estimate, also lowered its third-quarter growth forecast to 3.7%, down 0.1 percentage points from its previous estimate.

[email protected] Song Gyeong-jae Reporter