The U.S. goods trade deficit widened to $118.8 billion in July 2026, a 17.2% jump from June’s revised $101.4 billion and the largest monthly shortfall since March 2025, exceeding forecasts from every economist surveyed by Bloomberg. Goods imports rose 3.7% while exports fell 2.9%, driven by a surge in capital goods—computers, semiconductors, and telecommunications equipment tied to AI infrastructure—that marked the largest monthly increase since 1993. Nationwide chief economist Kathy Bostjancic said the wider gap will weigh on third-quarter GDP but reflects strong AI demand rather than economic weakness, as firms stockpile equipment amid shifting tariffs and supply-chain risks. Consumer goods imports rose only modestly and other categories declined, underscoring a structural technology-led expansion; industrial supplies trade softened as energy support faded after earlier Iran-related volatility. Retail inventories rose 0.7% and wholesale stockpiles continued rebuilding, offering a partial GDP offset. The Atlanta Fed’s GDPNow model had projected net exports would subtract 0.14 percentage points from third-quarter growth, versus a 1.14-point drag in the second quarter, and the larger July deficit suggests trade headwinds could intensify. Initial jobless claims edged down to 203,000, pointing to labor-market resilience. A fuller July trade report including services and inflation-adjusted goods data is due September 3.