The U.S. trade-in-goods deficit climbed 12% on a year earlier in July to reach $72 billion, confirming the trend shown by marine shipments and trade prices. The growth in imports was the fastest since February, even excluding energy, indicating the wide-ranging tariffs on Chinese exports have yet to suppress activity.

The first challenge to Trump administration policy emerging from the data is that exports climbed by just 4% ex-energy. That was the weakest since October 2017 and included a slowdown in agriculture export growth that may reflect retaliatory duties against 390 products.

The second issue is that the automotive sector is still contributing to the expansion in the deficit with a sector-specific deficit of $18 billion being the largest since December 2016. The latter adds urgency to both NAFTA negotiations (where a deal with Mexico has been struck) and the section 232 automotive review (which may have been delayed) in delivering the Trump administration’s key policy target of a lower deficit.