Washington, Sep 4: The US trade deficit widened sharply in July as imports increased while exports declined, highlighting the impact of strong domestic demand and higher purchases of technology-related goods.

The goods and services trade deficit rose 24.4 per cent to $88.6 billion in July from a revised $71.2 billion in June, according to data from the US Bureau of Economic Analysis and the US Census Bureau.

US imports increased 2.8 per cent to $399.3 billion, while exports fell 2.1 per cent to $310.7 billion during the month. The goods deficit alone widened to $119.6 billion, while the services surplus stood at $31 billion.

A key feature of the July data was the strong rise in imports of capital goods. These imports reached a record $140.3 billion, with computers, computer equipment and semiconductors among the products driving the increase. The trend reflects continued investment in technology and artificial intelligence-related infrastructure.

The US also recorded a $5 billion goods trade deficit with India in July, keeping the India-US trade relationship in focus amid ongoing changes in global trade and tariff policies.

For India, the US remains an important export market. Indian shipments to the US have remained significant across engineering goods, electronics, pharmaceuticals, textiles and other manufacturing segments. Strong US demand therefore remains important for Indian exporters, even as changing tariff and trade policies create a more challenging global environment.

The wider US trade gap also comes as the global economy adjusts to changing supply chains, tariff measures and shifting patterns of business investment. The surge in technology-related imports suggests that demand for capital equipment remains strong, particularly around the expansion of artificial intelligence and digital infrastructure.

The July figures underline the changing nature of US trade, with strong import demand continuing to shape the country’s external balance even as export growth remains under pressure.