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# The Latest on the US Trade Deficit as We Head to the US Mid-term Elections
- URL: https://www.benchmarkanalytics.com.au/the-latest-on-the-us-trade-deficit-as-we-head-to-the-us-mid-term-elections/
- Published: 2026-10-17T20:30:00.000Z
- Updated: 2026-10-17T20:29:59.000Z
- Description: The US trade deficit increased 13.7% in August as imports reached record levels. Yet the cumulative deficit for 2026 is nearly 20% smaller than last year. What does this mean for Trump's tariff policies ahead of the midterms?
- Author: Nick Hossack
- Tags: US Trade Deficit, Donald Trump, US Mid-term Elections, Manufacturing, China

With just a few weeks until until the US midterm elections, Donald Trump's tariff policies face an interesting statistical test: America's trade deficit has widened sharply, but its cumulative deficit for 2026 remains substantially below last year's.

The latest Bureau of Economic Analysis figures, released on 6 October, show that the **US trade deficit increased 13.7% to $105.6 billion in August**, its highest level since March 2025.

Imports jumped 4.3% to a record $420.8 billion, while exports increased just 1.4% to $315.2 billion.

The underlying figures are revealing. America recorded a $136.6 billion deficit in goods, partly offset by a $31 billion surplus in services.

Imports of capital goods reached a record $146.4 billion, including increased purchases of semiconductors and industrial machinery. The AI investment boom is helping drive demand for imported equipment.

### Where is the deficit coming from?

Mexico recorded America's largest bilateral goods deficit in August, at $27.7 billion, followed by Vietnam ($24.0 billion), Taiwan ($18.3 billion) and China ($16.4 billion).

This raises questions about whether tariffs are reducing America's import dependence or redirecting trade towards alternative suppliers.

### Are Trump's tariffs working?

The year-to-date figures tell a different story.

Through August, **America's cumulative trade deficit was $138.2 billion, or 19.9%, smaller than over the equivalent period in 2025.** Exports increased 11.8%, compared with 4.4% growth in imports.

However, unusually heavy imports ahead of tariff increases in early 2025 complicate the comparison.

Trade deficits also reflect domestic spending, investment and saving, not simply trade policy.

The next trade figures are due on **4 November — one day after the midterms**.

The political question is whether voters believe Trump's tariffs are strengthening American industry sufficiently to justify their economic costs.

| BENCHMARK ANALYTICS \| US ECONOMY America's Trade Deficit Latest official data: August 2026                                                                                                                                                                                                                                                                                         |
| ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| AUGUST TRADE DEFICIT $105.6bn +13.7% from July 2026 YEAR-TO-DATE DEFICIT \-19.9% Compared with Jan-Aug 2025                                                                                                                                                                                                                                                                         |
| Imports continue to exceed exports August 2026, goods and services, US$ billion Imports $420.8bn Exports $315.2bn Monthly change: imports +4.3%; exports +1.4%.                                                                                                                                                                                                                     |
| Goods versus services                                                                                                                                                                                                                                                                                                                                                               |
| Goods trade deficit \-$136.6bn Services trade surplus +$31.0bn Net trade deficit \-$105.6bn                                                                                                                                                                                                                                                                                         |
| America's largest bilateral goods deficits                                                                                                                                                                                                                                                                                                                                          |
| August 2026, selected countries, US$ billion Mexico $27.7bn Vietnam $24.0bn Taiwan $18.3bn China $16.4bn South Korea $9.4bn Canada $7.1bn Goods-only balances, Census basis. Country figures are not directly comparable with the overall goods-and-services deficit.                                                                                                               |
| AN IMPORTANT DEVELOPMENT $146.4 billion Record imports of capital goods in August. Demand for semiconductors, machinery and equipment associated with US investment, including AI infrastructure, is supporting imports.                                                                                                                                                            |
| The election timing **3 November 2026:** US midterm elections **4 November 2026:** Next official trade report, covering September.                                                                                                                                                                                                                                                  |
| **Source:** US Bureau of Economic Analysis and US Census Bureau, International Trade in Goods and Services, August 2026, released 6 October 2026\. Data seasonally adjusted, nominal US dollars. [View official release ](https://www.bea.gov/news/2026/us-international-trade-goods-and-services-august-2026?ref=benchmarkanalytics.com.au) Benchmark Analytics \| 12 October 2026 |