U.S. trade deficit jumps 14% to widest since Trump’s ‘Liberation Day’ tariffs

America’s trade deficit just got a lot uglier. The gap between what the country buys from abroad and what it sells overseas widened 13.7% in August to $105.6 billion, blowing past the $102 billion economists had expected.

Imports alone jumped 4.3%, helped by the expensive hardware feeding America’s AI construction frenzy and by businesses still trying to navigate President Donald Trump’s tariff regime. The monthly deficit is now the biggest since March 2025, the month before Trump rolled out his “Liberation Day” reciprocal tariffs.

The tariffs were marketed in part as a means to even out the trade imbalance, but business continues to import aggressively in search of equipment, parts, and technology. On the other hand, the year-to-date figures are less eye-catching; the deficit stands at $138.2 billion, almost 20% lower than last year.

AI spending is now big enough to distort the trade picture

A significant portion of the imports during August came as a result of the United States’ continuing build-up of artificial intelligence. AI is not some mystical cloud floating above the economy. AI requires servers, networking technology, cooling systems, power systems, chips, and many other pieces of hardware. A lot of that crosses borders before reaching a United States data center.

This makes interpreting the trade numbers slightly more difficult. Imports usually subtract from GDP estimates, but an increasing amount of imports does not necessarily mean that domestic demand is breaking down. Sometimes, it is because businesses are investing heavily because they believe that future demand will be high.

Nevertheless, the most recent numbers were enough to get the economists to do some number crunching again. Goldman Sachs downgraded its estimates for economic growth during Q3 to 3.1%, which is a decrease by 0.3% from its prior expectations. The GDPNow model by Atlanta Federal Reserve also decreased to 3.7%.

And yet, according to analysis from The Kobeissi Letter, the current U.S. expansion has now lasted 78 straight months, making it the sixth-longest business cycle since 1854. The historical average is only 49 months, while the median is 38. The longest uninterrupted expansion ran for 128 months between 2009 and 2020, ending only when the COVID-19 shock slammed the brakes on economic activity.

US households left with nothing to celebrate

The labor market is another example of that contradiction. Truist chief strategist Keith Lerner recently noted that unemployment is approaching one of the longest stretches below 5% in U.S. history, nearing a record last seen in the mid-1960s.

Then September happened.

Jobs growth totaled a mere 29,000 jobs, coming in well short of expectations for approximately 90,000 jobs and below the 12-month average monthly growth of 45,000 jobs. The July figure was revised from 21,000 to -10,000 job losses, while August dropped from 162,000 to 133,000. Combined, that revision erased 60,000 jobs from estimates.

The unemployment rate rose from 4.1% to 4.2%, while labor-force participation stayed at 61.8%. Hardly what anyone would call a rapid collapse, but it is a reflection of an economy losing steam where it counts the most to workers.

And then there is the thing that can’t be spreadsheeted out of existence in Washington, which is affordability.

Kevin Hassett, director of the National Economic Council, made the case on CNN that general unhappiness by the public will register in the economic figures. But as CNN host Jake Tapper pointed out, it already did, only in ways Hassett didn’t want to highlight.

Polls back this up. The Associated Press found 82% disapproval rating of Trump handling of the cost of living among Americans. Recent CNN and Marquette University Law School polls showed similar levels of 80%.

Getting eight out of ten Americans to agree on anything during an election season is almost an economic miracle by itself.

That disconnect is now the real story. The United States can post months of expansion, keep unemployment historically low and avoid recession while ordinary households still feel squeezed by prices. The widening trade deficit adds another layer to that mess: tariffs may change trade incentives, but they do not stop American companies from buying foreign goods when the AI race, consumer demand and industrial spending tell them they have little choice.