The trade deficit rose sharply in July, hitting $1,063 billion on an annualized basis. That’s up from $854 billion in June. It’s the highest since the big import surge following Trump’s election, where people and businesses stocked up in anticipation of the Trump tariffs.

In the scheme of things, there is not any big problem with August’s deficit. It’s a bit more than 3.0 percent of GDP. We’ve had much larger deficits in prior years. The main factor driving the rise was a jump in imports of computer chips and other items needed for data centers. The data centers might be a problem, but the fact that the chips are imported is not an especially big deal.

However, this does matter in the world of Trump crazy, where countries are ripping us off if they are selling things we want. In that world, we are being ripped off by $110 billion more in August than July. If we look at the pattern of trade deficits over the last two and a half years, it doesn’t look like Trump is making much progress in his efforts to “liberate” us.

The trade deficit had been running at roughly an $850 billion annual rate through the first 10 months of 2024. It then soared immediately after the election and into the first months of 2025 as people and businesses rushed to buy cars, appliances, capital goods, and other durable goods in anticipation of Trump’s tariffs. The peak was a $1,596 billion annual rate in March of 2025, just before Trump’s big tariff announcement.

After “Liberation Day,” the trade deficit did fall somewhat, but this was largely the result of the post-election buying binge. People who bought a car in March of 2025 were not going to buy another one later in the year.

In more recent months, imports have been rising, pushing trade deficits well above their pre-election level. On the plus side, when the AI bubble bursts, we will see a big decline in our trade deficit.

Dean Baker is a senior economist at the Center for Economic and Policy Research and the author of the 2016 book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer. Please consider subscribing to his Substack, from which this is reprinted with permission.