A new blow to Trump. The trade gap with China is widening

The US trade deficit narrowed slightly in July, but the trade gap with China - the focus of US President Donald Trump's "America First" administration - has increased to six-month highs.

The Commerce Department said in a report on Wednesday that the trade deficit (goods and services) fell 2.7% to $ 54 billion as exports recovered and imports fell.

In July, exports of US goods abroad rose 0.9% to $ 138.2 billion, while imports fell 0.2% to $ 211.8 billion.

However, the politically sensitive trade in goods with China increased 9.4% to $ 32.8 billion, with imports rising 6.4% and exports to China falling 3.3% in July.

The commodity trade deficit with the EU jumped to a record high, with the deficit with Germany reaching its highest level since August 2015.

With China imposing additional tariffs on some US food products, exports are likely to fall in the coming months.

The Chinese Ministry of Commerce said in early August that Chinese companies had stopped buying US agricultural products.

Economists believe imports rebounded in August as companies mostly resorted to storing Chinese goods after announcing more tariffs.

On Tuesday, a report by manufacturers showed the US manufacturing sector contracted in August for the first time since 2016 amid concerns about a weakening global economy and rising trade tensions between China and the United States.

The Institute for Supply Management said its index of US factory activity fell to 49.1, its lowest level since January 2016.

Warning
Trump has returned to the language of warning, saying in a tweet on Tuesday that China is stalling in trade negotiations with his country, hoping for the emergence of a new US administration after the upcoming elections.

He said that 16 months of talks between his country and Beijing is a long thing, and it was a period of bleeding jobs and losses for companies in China.

He said his victory in the upcoming election would mean a collapse of China's supply chain to the United States, and companies there would be affected, because he would adopt tough talks. Last Sunday, a new $ 115 billion US tariff package on Chinese imports came into effect.

A second package of the same tariffs will be introduced on Beijing's $ 160 billion imports from December 15.

Last Sunday, a Chinese decision to impose an additional 5 percent and 10 percent tariffs on US-origin goods worth $ 75 billion came into effect.