On October 6, the Census Bureau and Bureau of Economic Analysis reported that the US goods and services trade deficit widened to $105.6 billion in August, up from $92.8 billion in July, as imports grew faster than exports.

Cato’s Scott Lincicome on what is behind the numbers:

“A widening US trade deficit should come as no surprise. The generational AI buildout has fueled strong demand for imported inputs and machinery, most of which remain tariff-free. Higher energy prices, meanwhile, will also add to the ledger. And importers are likely taking advantage of reduced global tariffs to rebuild inventories in advance of the holiday season (and potentially more tariffs). In a sane world, this news – outside of energy prices – would be welcomed by the White House, as the trade deficit usually expands in tandem with a growing US economy. But for a White House that has demonized the trade deficit and promised voters that historic US tariffs will “fix” it, the news is more unwelcome proof that the president’s tariff experiment isn’t working.”

Lincicome can speak to what is driving imports, why a larger deficit often accompanies a growing economy, and what the figures mean for the administration’s tariff promises. Please contact Madison: mmiller@​cato.​org.