Prior month -92.8 billionDetails from the BEA:Goods and services deficit: $105.6 billion. Prior $92.8 billion, revised. That is worse than expectations of -102.0BDeficit widened $12.7 billion, or 13.7%, from July.Exports: $315.2 billion, up $4.5 billion or 1.4%.Imports: $420.8 billion, up $17.2 billion or 4.3%.Goods deficit: $136.6 billion, widening $12.8 billion.Services surplus: $31.0 billion, little changed.Real goods deficit: $114.7 billion, widening 8.2%.Year-to-date deficit: Down 19.9% from the same period in 2025.The US trade deficit widened sharply in August as imports increased much faster than exports. The Census Bureau and Bureau of Economic Analysis reported a $105.6 billion goods and services deficit, compared with a revised $92.8 billion in July (Revised from -88.6B).The import increase was concentrated in industrial supplies and capital goods - think AI infrastructure. Industrial supplies imports rose $9.1 billion, including increases of $3.3 billion in crude oil and $3.1 billion in nonmonetary gold. Capital goods imports increased $6.2 billion, led by semiconductors and other industrial machinery.Exports also improved, helped by gold, crude oil (higher prices this is August data) and technology products. However, pharmaceutical exports fell $2.4 billion, limiting the overall gain. Despite August’s deterioration, the cumulative deficit remains narrower than a year ago.Quick analysis: Imports did the heavy lifting—and pushed the deficit in the wrong direction. The wider inflation-adjusted goods deficit points toward a larger drag from net exports on third-quarter gross domestic product (GDP), all else equal. However, gold requires special treatment: BEA replaces reported nonmonetary gold trade with a separate adjustment when calculating GDP, so the headline widening will not translate directly into the growth calculation. U.S. Bureau of Economic Analysis (BEA)Stronger capital goods imports could also signal investment demand. That makes this a mixed growth signal rather than a clear indication of economic weakness. The report alone is unlikely to shift the Federal Reserve’s policy outlook materially; a larger trade drag could weigh on the dollar and yields at the margin, but inflation and employment remain more direct policy drivers.Of course Pres. Trump abhors trade deficits but the US trades with other countries and that is not going away (especially if the US economy is growing). The AI build is also are a big influence as chips are still imported from places like Taiwan and China remains an place for goods in the US. Taiwan trade deficit a year ago was $12.2 billion, compared with $18.3 billion in August 2026—a widening of $6.1 billion, or 50%. Interesting is Canada where the deficit widened $4.1 billion to $7.1 billion. Imports increased $4.6 billion to $37.1 billion, while exports rose $0.5 billion to $29.9 billion.US August goods trade balances by countryThe largest goods deficits were with Mexico, Vietnam, Taiwan and China. These figures cover goods only, on a Census basis.Trade deficits:Mexico: $27.7 billionVietnam: $24.0 billionTaiwan: $18.3 billionChina: $16.4 billionEuropean Union: $11.0 billionSouth Korea: $9.4 billionCanada: $7.1 billionIndia: $6.2 billionGermany: $6.2 billionMalaysia: $6.0 billionItaly: $4.3 billionJapan: $3.7 billionIreland: $2.5 billionFrance: $1.4 billionIsrael: $0.8 billionSwitzerland: $0.4 billionSingapore: $0.3 billionTrade surpluses:Netherlands: $7.7 billionSouth and Central America: $5.6 billionUnited Kingdom: $3.6 billionHong Kong: $2.3 billionBrazil: $1.3 billionBelgium: $1.2 billionAustralia: $0.6 billionSaudi Arabia: $0.4 billionNotable changes from July:Canada: The deficit widened $4.1 billion to $7.1 billion. Imports increased $4.6 billion to $37.1 billion, while exports rose $0.5 billion to $29.9 billion.Singapore: The balance shifted from a $1.9 billion surplus to a $0.3 billion deficit. Exports fell $1.1 billion, while imports increased $1.2 billion.Ireland: The deficit narrowed $1.5 billion to $2.5 billion, largely reflecting a $1.4 billion decline in imports.The regional totals overlap with individual countries—for example, Germany is included in the European Union—so these figures should not be added together.As a baseline, the odds of a Fed tightening remain plus or -20% (currently 21.6%). Yields remain lower with the two-year down -4.18 basis points at 4.791%. The 10 year yield is down -3.6 basis points at 5.277%. The Fed targets 3.75% – 4.0%. What this report measures: The monthly trade report measures US exports and imports of goods and services. A deficit means imports exceed exports. Traders monitor the seasonally adjusted figures because changes in inflation-adjusted net exports affect GDP growth; the headline dollar figures also reflect price changes and are subject to revision. This article was written by Greg Michalowski at investinglive.com.