The US trade deficit rose to a five-month high in July as exports of soybeans and civilian aircraft declined and imports hit a record high, suggesting the Trump administration's protectionist policy was so far not having an impact.
The administration's "America First" policies have left the United States embroiled in tit-for-tat tariffs with the European Union, Canada and Mexico as well as an escalating trade war with China. The goods trade deficit with China surged 10 per cent to a record $US36.8 billion ($A51.3 billion) in July
The Commerce Department said on Wednesday the trade gap jumped 9.5 per cent to $50.1 billion, increasing for a second straight month, suggesting that trade could be a drag on economic growth in the third quarter. Data for June was revised to show the trade deficit rising to $45.7 billion, instead of the previously reported $46.3 billion.
Economists polled by Reuters had forecast the trade deficit swelling to $50.3 billion in July. President Donald Trump has defended the duties on steel, aluminium imports and a range of Chinese goods as necessary to protect American industries from what he says is unfair foreign competition.
The administration says eliminating the trade deficit will put the economy on a sustainable path of faster growth, an argument that has been dismissed by economists as flawed given constraints such as low productivity and slow population growth.
The United States and China have slapped retaliatory tariffs on a combined $100 billion of products since early July, with more in the pipeline, posing risks to both domestic and global economic growth.
The trade gap narrowed in April and May as farmers front-loaded soybean exports to China before Beijing's retaliatory tariffs came into effect in early July.
US financial markets were little moved by the data. The deterioration in the trade deficit was flagged in an advance report published last month.
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