The United States buys more goods and services from the rest of the world than it sells abroad. In June, that gap stood at $73.3 billion.
The next official report, covering July 2026, will be released by the Bureau of Economic Analysis and Census Bureau on September 3 at 8:30 a.m. Eastern time.
For most people, the trade deficit sounds like an abstract economic number. In practice, it is built from very familiar things. Americans import cars, phones, computers, clothing, oil, medicines and industrial equipment. U.S. companies export aircraft, machinery, agricultural products, energy, chemicals and many other goods. Services such as travel, financial services, software-related business services and intellectual property also count.
The July report deserves more attention than a normal monthly release because U.S. trade policy changed considerably during the summer. New tariffs were introduced, the United States escalated its dispute with Canada, and businesses had to decide whether to bring goods into the country earlier, delay purchases or find new suppliers. Those decisions can move monthly import and export figures by billions of dollars.
The Latest U.S. Trade Deficit Is $73.3 Billion
Until the July figures are released on September 3, June remains the latest complete month available.
| U.S. trade measure | June 2026 | Change from May |
|---|---|---|
| Exports | $314.7 billion | Down $2.9 billion |
| Imports | $388.0 billion | Down $7.3 billion |
| Trade deficit | $73.3 billion | Down $4.4 billion |
The deficit narrowed from a revised $77.6 billion in May to $73.3 billion in June, according to the Bureau of Economic Analysis.
Imports fell faster than exports. That is important because a smaller deficit does not automatically mean American companies suddenly sold much more abroad. In June, both sides of the trade equation declined.
Goods Create Most of the Trade Deficit
The overall trade number combines two very different parts of the economy.
The United States runs a large deficit in physical goods and a surplus in services.
| Trade category | June 2026 balance |
|---|---|
| Goods | $102.1 billion deficit |
| Services | $28.8 billion surplus |
| Goods and services combined | $73.3 billion deficit |
The services surplus offsets part of the much larger goods deficit. Without services, the monthly trade gap would have exceeded $100 billion in June.
That distinction gets lost when the trade deficit is discussed as one number.
What Counts as a U.S. Import?
An import is a good or service purchased from abroad by someone in the United States.
Physical imports include products such as:
- passenger cars and auto parts
- computers and telecommunications equipment
- phones and consumer electronics
- pharmaceutical products
- industrial machinery
- crude oil and petroleum products
- clothing and footwear
- furniture
- metals and industrial materials
- food and beverages
Many imports are not finished consumer products. American factories also import components, machinery, chemicals, metals and other inputs needed to produce goods inside the United States.
A rise in imports can therefore mean American consumers are buying more foreign products, but it can also indicate that U.S. businesses are investing or increasing production.
What Does the United States Export?
The United States is also one of the world’s largest exporters.
Major export categories include:
- civilian aircraft and aircraft parts
- industrial machinery
- semiconductors and other technology products
- chemicals
- pharmaceutical products
- oil and petroleum products
- natural gas
- vehicles and vehicle parts
- corn, soybeans, meat and other agricultural products
- medical equipment
Services are another major U.S. export. Foreign customers pay American companies for financial services, professional services, technology-related services, licensing and intellectual property. Foreign tourists and students spending money in the United States also contribute to U.S. service exports.
Why the U.S. Has a Trade Deficit Even Though It Exports So Much
The United States does not have a trade deficit because it exports very little. It has a deficit because imports are even larger.
In June, the country exported $314.7 billion and imported $388.0 billion.
The difference was $73.3 billion:
$388.0 billion in imports minus $314.7 billion in exports = $73.3 billion trade deficit.
A country can therefore have enormous exports and still run a trade deficit.
A Trade Deficit Is Not the Same as the Federal Budget Deficit
The two terms are easy to confuse, but they measure completely different things.
| Trade deficit | Federal budget deficit |
|---|---|
| Imports exceed exports | Federal spending exceeds federal revenue |
| Measures international trade | Measures government finances |
| Reported by BEA and Census Bureau | Tracked through federal budget data |
A $73.3 billion monthly trade deficit does not mean the federal government borrowed $73.3 billion that month.
Mexico Is Now One of the Largest Trading Partners
Mexico has become central to U.S. supply chains, particularly in vehicles, electronics, machinery, appliances and manufacturing components.
U.S. goods trade with Mexico reached about $871.6 billion in 2025, according to the Office of the United States Trade Representative.
| U.S. goods trade with Mexico in 2025 | Value |
|---|---|
| U.S. exports to Mexico | $337.3 billion |
| U.S. imports from Mexico | $534.3 billion |
| Total goods trade | $871.6 billion |
| U.S. goods deficit | $197.0 billion |
The U.S. also ran a services surplus with Mexico. American service exports to Mexico reached $52.8 billion in 2025, compared with $39.7 billion in imports.
Trade with Mexico illustrates why looking only at the national deficit can hide important details. The United States may run a large goods deficit with a country while simultaneously running a services surplus.
China Remains a Major Source of U.S. Imports
Trade with China has fallen sharply from its earlier levels, but it remains one of the largest bilateral trading relationships in the world.
U.S. goods imports from China totaled $308.7 billion in 2025, while American goods exports to China were $106.0 billion, according to the U.S. Trade Representative.
| U.S. goods trade with China in 2025 | Value |
|---|---|
| Exports to China | $106.0 billion |
| Imports from China | $308.7 billion |
| Total goods trade | $414.6 billion |
| U.S. goods deficit | $202.7 billion |
Goods imports from China fell 29.9% from 2024, while exports declined 26.0%.
Services again moved in the opposite direction. The United States recorded a $34.4 billion services surplus with China in 2025.
Canada Is Different Because Trade Runs in Both Directions at Enormous Scale
Canada is one of the largest buyers of American products as well as one of the largest suppliers to the United States.
Total U.S. goods trade with Canada reached $715.5 billion in 2025. American companies exported $333.6 billion in goods to Canada and imported $381.9 billion, according to USTR data.
| U.S. goods trade with Canada in 2025 | Value |
|---|---|
| Exports to Canada | $333.6 billion |
| Imports from Canada | $381.9 billion |
| Total goods trade | $715.5 billion |
| U.S. goods deficit | $48.3 billion |
The United States simultaneously ran a $27.7 billion services surplus with Canada.
Canada also bought $175.8 billion in American goods during the first six months of 2026. That relationship has become particularly important this summer because both governments have imposed new tariffs.
We recently wrote about Canada’s new tariffs on nearly $20 billion of U.S. goods, which are scheduled to take effect on September 8. The United States had already imposed additional tariffs on selected Canadian products.
July Trade Data Will Capture a Period of Major Tariff Changes
July is especially interesting because companies were operating around several changing tariff deadlines.
Businesses facing a future tariff sometimes bring goods into the country earlier than planned. An importer that expects a product to become more expensive next month has an incentive to clear shipments through customs before the new duty begins.
That can temporarily push imports higher.
The reverse can happen after a tariff takes effect. Importers may reduce orders because the product has become more expensive, switch suppliers or wait for political negotiations.
Monthly trade figures can therefore become unusually volatile around major tariff announcements.
Tariffs Do Not Automatically Reduce the Trade Deficit
Tariffs are intended in part to make imported goods more expensive and encourage buyers to choose domestic alternatives. The effect on the total trade deficit is less straightforward.
An importer may stop buying from one country and begin buying the same product from another. Imports fall from the targeted country, but total U.S. imports change very little.
A stronger dollar can also make foreign products cheaper for Americans and make U.S. exports more expensive for foreign buyers.
Domestic production capacity matters too. If American companies cannot quickly produce enough of a product, buyers may continue importing it even after tariffs raise the cost.
Our recent coverage of the U.S.-Canada trade dispute and consumer prices explains how tariffs can affect households even before they significantly change the overall volume of trade.
Who Actually Pays a U.S. Import Tariff?
The importer pays the tariff to the U.S. government when covered goods enter the country.
For example, consider an American business importing $100,000 of merchandise subject to a 25% tariff.
| Item | Amount |
|---|---|
| Imported goods | $100,000 |
| 25% tariff | $25,000 |
| Cost before freight and other expenses | $125,000 |
The foreign government does not send the $25,000 to Washington. The American importer pays it.
The final economic cost can then be divided in several ways. The importer can accept a smaller profit, negotiate a lower price from its foreign supplier, raise prices for customers or use some combination of all three.
Services Keep a Large Part of the Trade Gap From Being Even Bigger
Services receive less attention because they are harder to see than containers being unloaded at a port.
They still represent hundreds of billions of dollars in international commerce.
Examples include:
- financial and insurance services
- business consulting
- research and development
- software and technology services
- royalties and licensing
- education
- foreign tourism in the United States
- transportation services
The $28.8 billion services surplus recorded in June reduced the overall deficit substantially.
If the United States had balanced services trade instead, the June trade deficit would have been close to the full $102.1 billion goods deficit.
Travel Counts as International Trade Too
A Canadian family visiting Florida and paying for a hotel, restaurant meals and attraction tickets is effectively buying American services.
That spending counts as a U.S. service export.
An American traveling to Italy and spending money at hotels and restaurants creates a U.S. service import.
The same principle applies to foreign students paying tuition at American universities and American students paying institutions overseas.
Trade in Oil Can Move the Numbers Quickly
Energy prices can shift the dollar value of imports even when the physical quantity changes very little.
If the United States imports the same number of barrels of oil but the price per barrel rises sharply, the value of imports increases.
Canada is especially important here. The United States imports large quantities of Canadian crude oil, much of it used by Midwest refineries designed to process heavier crude.
Energy trade is one reason the U.S. goods deficit with Canada should not be interpreted simply as Americans buying consumer products from Canadian stores and factories.
Aircraft Can Move Monthly Export Numbers by Billions
Some trade categories are naturally volatile.
A commercial aircraft can cost tens or hundreds of millions of dollars. A month with a large number of aircraft deliveries can noticeably lift U.S. exports.
Pharmaceutical shipments, precious metals and large industrial equipment orders can have similar effects.
That is why one month’s change in the trade deficit needs to be read alongside several months of data rather than treated as a new long-term trend by itself.
A Falling Trade Deficit Is Not Always Good News
Consider two very different situations.
In the first, American exports rise sharply and imports remain stable. The trade deficit falls because foreign customers bought more U.S. products.
In the second, exports fall slightly but imports collapse because American consumers and businesses are spending less.
Both produce a smaller deficit.
The economic story is completely different.
June was closer to the second example. Exports fell $2.9 billion, but imports fell even more, by $7.3 billion. The deficit narrowed because import spending declined faster.
A Larger Trade Deficit Is Not Automatically Evidence of a Weak Economy
A growing economy can actually import more.
Households with higher incomes buy more consumer goods. Businesses purchase machinery and components. Construction companies import materials. Retailers increase inventories when they expect higher sales.
All of those activities can widen the trade deficit.
For the same reason, a recession can reduce the deficit simply because domestic demand collapses and Americans buy fewer imported products.
Trade data are therefore much more useful when viewed alongside consumer spending, business investment, employment and GDP.
Imports Subtract From GDP, but That Does Not Mean Imports Reduce the Economy Dollar for Dollar
Gross domestic product measures production inside the United States.
The standard GDP formula includes:
GDP = Consumer spending + Investment + Government spending + Exports – Imports
Imports are subtracted because foreign production may already appear inside consumer spending, investment or government purchases. Subtracting imports prevents foreign production from being counted as American output.
That accounting rule is sometimes misunderstood as meaning that every dollar of imports makes the U.S. economy one dollar poorer. It does not.
An American company can import a $5 million machine and use it to expand production in a U.S. factory. The imported machine is removed from domestic production in the GDP calculation, but the investment and subsequent American production still matter to the economy.
What to Watch in the July 2026 Report
The September 3 release will provide much more than a single deficit number.
Several figures deserve attention:
- Total exports: Did American companies sell more goods and services abroad?
- Total imports: Did households and businesses increase purchases from foreign suppliers?
- Goods deficit: Did the gap in physical products widen or narrow?
- Services surplus: Did America’s advantage in services continue to offset the goods deficit?
- Consumer goods imports: A useful signal for household demand and retail inventories.
- Capital goods: Machinery and equipment imports can provide information about business investment.
- Industrial supplies: Energy, metals and other factory inputs can be heavily affected by commodity prices.
- Automotive trade: Vehicles and parts are particularly important for trade with Mexico and Canada.
- Country balances: China, Mexico, Canada, the European Union, Taiwan and other major partners can move sharply from month to month.
Country Deficits Can Change Even When the Overall Deficit Does Not
June provided a good example.
The U.S. trade balance with Switzerland moved from a $2.3 billion deficit in May to a $2.9 billion surplus in June.
The deficit with Taiwan fell by $4.5 billion to $14.9 billion.
At the same time, the deficit with South Korea increased by $3.0 billion to $7.4 billion.
Large changes with individual partners can therefore offset each other inside the national total.
Why America Cannot Simply Stop Importing
A large part of U.S. trade consists of supply chains built over decades.
American automakers use components produced in Mexico and Canada. Refineries process Canadian crude. Electronics manufacturers source parts from Asia. Hospitals buy medical products made overseas. Retailers depend on foreign factories for clothing, furniture and consumer electronics.
Replacing those suppliers requires factories, workers, equipment, transport networks and investment. Some production can move to the United States, but large changes take years rather than weeks.
Other products depend on geography or resources that cannot simply be recreated domestically.
The Trade Deficit Has Several Causes, Not One
Tariffs receive much of the political attention, but several forces influence the U.S. trade balance:
- consumer demand
- business investment
- the value of the U.S. dollar
- economic growth in other countries
- oil and commodity prices
- interest rates
- tariffs
- supply-chain changes
- domestic production capacity
- government fiscal policy
A strong dollar, for example, gives Americans more purchasing power abroad but makes American products more expensive for foreign customers. That can increase imports and make exports harder to sell.
For Now, $73.3 Billion Is the Number to Beat
The United States entered July with a monthly goods and services deficit of $73.3 billion. Imports stood at $388.0 billion and exports at $314.7 billion.
The September 3 report will show if that gap widened again or continued to narrow. The more useful question will be why. Stronger exports, weaker imports and tariff-driven changes in shipment timing can all produce a similar headline number while telling very different stories about the U.S. economy.
References
- U.S. Bureau of Economic Analysis, U.S. International Trade in Goods and Services, June 2026
- U.S. Bureau of Economic Analysis, International Trade in Goods and Services Data
- U.S. Bureau of Economic Analysis, Detailed U.S. Goods Trade Data
- U.S. Bureau of Economic Analysis, 2026 Economic Release Schedule
- Office of the United States Trade Representative, U.S. Trade With Canada
- Office of the United States Trade Representative, U.S. Trade With Mexico
- Office of the United States Trade Representative, U.S. Trade With China
