The U.S. Trade Deficit Shrinks—Except With China

China Shipping Container Lines containers sit stacked at the Port of Los Angeles in San Pedro, California on April 8 Photograph by Patrick T. Fallon/Bloomberg

The good news? The overall U.S. trade deficit unexpectedly shrank a bit less than 1 percent in July from June. It was the smallest gap in half a year, and exports broke a record. The bad news? The U.S. deficit in manufacturing set a monthly record, and the deficit in goods traded with China also broke a record.

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