The U.S. trade deficit grew slightly in July as exports to Europe fell and imports from China soared to a new record high, the government reported Tuesday. The Commerce Department said the trade deficit widened to $42 billion, 0.2 percent higher than June's imbalance of $41.9 billion. Analysts had expected a bigger $44 billion deficit. U.S. exports fell 1 percent to $183.3 billion, reduced by weaker sales of autos, telecommunications equipment, and heavy machinery. However, exports of food, feeds, and beverages, helped by high crop prices, set a record high. The ongoing debt crisis in Europe was hurting demand, with U.S. exports to the 27 countries of the European Union (EU) falling 11.7 percent in July. Exports to Germany were the lowest since February 2010, and the trade deficit with the EU was the biggest since October 2007. Exports to China rose modestly. China accounts for about 7 percent of U.S. exports and has the second-biggest economy in the world. Still, its economy has weakened this year. Exports to other big emerging economies fell. U.S. sales of goods to Brazil plunged 4.4 percent, while exports to India dropped 1.2 percent. Imports declined 0.8 percent to $225.3 billion, with oil imports dropping 6.5 percent, and imports of oil and other industrial supplies and materials falling to the lowest since late 2010. The politically sensitive trade deficit with China grew 7.2 percent in July to $29.4 billion, the biggest with any single country. The figure reflected a 5.6 percent jump in imports to $37.9 billion, which vastly outpaced a 0.4 percent rise in U.S. exports to $8.6 billion.
