US trade deficit widens 13.7% to $105.6B in August as imports hit record $420.8B despite tariffs

The US trade deficit widened 13.7% to $105.6 billion in August, the largest since March 2025, as imports rose 4.3% to a record $420.8 billion, the Commerce Department said Tuesday. Economists polled by Reuters had forecast a $102.0 billion gap. Imports were driven by a $6.2 billion jump in capital goods to a record $146.4 billion, led by semiconductors tied to the AI buildout, and a $9.1 billion rise in industrial supplies including petroleum and nonmonetary gold. Exports rose 1.4% to $315.2 billion. The goods deficit increased 10.3% to $136.6 billion and widened 8.2% to $114.7 billion adjusted for inflation. Trade has subtracted from GDP for three straight quarters and could cut as much as 2.5 percentage points from third-quarter growth. Goldman Sachs trimmed its GDP estimate to 3.1% from 3.4%. Economists said the excess demand supports expectations the Federal Reserve will hike rates again this year, after last month's 25-basis-point increase to 3.75%-4.00%.