Economic Report: Trade gap widens in June as tariff boost to exports fades
The numbers: The trade gap widened in June as a one-time to boost to inventories ahead of the introduction of tariffs faded.
The Commerce Department reported a 5.5% widening of the U.S. goods trade deficit to $ 68.3 billion. It also reported no change to both wholesale and retail inventories during the month.
What happened: In May, companies raced to ship agricultural products, namely soybeans, ahead of tariffs that China was readying in response to the levies the U.S. was imposing on a range of Chinese goods. After a 14.1% surge in the export of foods, feeds and beverages, exports of those products fell 0.5% in June.
Consumer goods exports fell 8.6% and vehicle exports sank 6.1%.
While exports in total fell 1.5%, imports rose 0.6%, helped by rising demand for consumer goods and vehicles. The advanced report doesn’t include data on services, for which the U.S. is a net exporter.
The big picture: Trade will still be a boost to second-quarter GDP. “If anything, the data appear to be weaker than we assumed for our 4.2% estimate for the real growth rate, but not by much,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics.
Related: Get ready for the GDP hot takes
Market reaction: U.S. stocks SPX, -0.23% opened lower, driven more by Facebook’s disappointing numbers than the latest economic reports. The yield on the 2-year Treasury TMUBMUSD02Y, -0.15% stayed at 2.673%.