The U.S. trade deficit in goods and services grew to the biggest gap in 16 months in July, as America imported more electronics to feed the country’s artificial intelligence boom.
The monthly trade deficit, the gap between what the United States imports and what it exports, hit $88.6 billion in the month, according to data the Commerce Department released on Thursday. That was an increase of more than 24 percent compared with June.
While some economists said the data mostly reflected the strength of the U.S. economy and the A.I. build out, the data still threatened to present a setback for the Trump administration. Mr. Trump has imposed steep global tariffs on the theory that they will reduce the trade deficit and bolster domestic manufacturing.
But the war with Iran, as well as new tranches of tariffs and court battles that have stripped away some of those levies, have disrupted supply chains and led to uncertainty for companies. America’s A.I. boom is also continuing uninterrupted, requiring significant imports of expensive computing products.
In July, surging shipments of computers, computer accessories and semiconductors fueled overall imports, which grew 2.8 percent from the previous month, to $399.3 billion. U.S. exports fell 2.1 percent compared with June, hitting $310.7 billion, as the United States exported less gold and crude oil.
The trade balance in July is larger than the average monthly trade deficit in the year before President Trump was elected. It is also the largest deficit since he began imposing tariffs in earnest, in April of last year. In the months before that, in early 2025, the trade deficit had exploded as U.S. importers tried to bring in as many products as they could ahead of tariffs coming into effect.
Mr. Trump sees the trade deficit as a sign of America’s manufacturing weakness, and he has imposed steep tariffs on foreign goods in an effort to reduce it. The Supreme Court struck down many of Mr. Trump’s global tariffs in February, but he has turned to other laws to replace them.
In July, the administration put a new round of tariffs on more than 80 countries, and it is considering placing another round of tariffs on more than 40 countries in the coming weeks.
Many economists have questioned how good of a tool tariffs are for reducing the trade deficit. Others have argued that tariffs have weighed on some kinds of imports, but that has been offset by surging purchases of expensive foreign-made chips and computers to construct new data centers.
In July, imports of capital goods, the category that includes computers, hit the highest level on record. The U.S. trade deficit with Taiwan, a major manufacturer of chips, also hit a record $20.7 billion in July.
In the first half of the year, U.S. goods imports from Taiwan were $143 billion, surpassing total U.S. imports from China at $140 billion. U.S. trade deficits with Mexico, Vietnam, Thailand and South Korea also climbed.
The administration has exempted chips, smartphones and other electronics from its tariffs for more than a year. Officials have been reluctant to slow data center construction, which is driving U.S. investment and growth in the stock market.
Administration officials say that tariffs on chips are coming soon, but they are widely expected to contain significant carve outs for companies that are building new chip facilities in the United States.
The war in Iran has also made trade particularly volatile this year, as the closure of the Strait of Hormuz scrambled supply chains for oil, fertilizer, product packaging and helium. U.S. petroleum exports surged earlier this year but fell back in July from those higher levels.
It also remains to be seen how much a trade fight with Canada will raise U.S. import taxes. The administration imposed a 50 percent tariff on roughly $20 billion Canadian exports after trade talks collapsed last month.
Canada has vowed to impose tariffs on an equal value of American exports starting Sept. 8, and Mr. Trump has in turn threatened to increase tariffs on all cars, trucks, car parts and steel from Canada to 50 percent, starting on Jan. 1.
The larger trade deficit in July suggests economic growth figures could come in lower for the United States in the third quarter. That is not because imports reduce economic growth per se, but because net imports are subtracted from gross domestic product to avoid double counting.
In an interview with CNBC on Wednesday, Howard Lutnick, the commerce secretary, blamed the Supreme Court ruling against the president’s tariffs for leading to a flood in imports and resulting in lower G.D.P. growth. But he said that the administration would finish replacing the levies the coming weeks.
“Over the next couple of weeks, they’ll be all back in place, and you’ll see imports start to fall, and you’ll see G.D.P. rise,” Mr. Lutnick said.
Still, some economists said that the larger trade deficit was not, overall, a negative sign for the economy. Eswar Prasad, a professor of trade policy and economics at Cornell University, said that the trade deficit was mainly a sign of the U.S. economy’s strength relative to other major economies, and that the rising deficit had “more good news than bad news built into it.”
“The overall assessment ought to be that U.S. economic dynamism, particularly in the A.I. sector and other high tech industries, is driving both foreign exports and foreign investment flows into the U.S.,” he said.