US trade deficit expands in June amid growing tensions

The US trade deficit swelled in June by the largest amount in 19 months, reversing much of May's trade-war driven export bonanza, even as brinkmanship between Beijing and Washington worsened.

A dip in auto exports and rising oil prices in June drove the increase in the gap between US imports and exports, the Commerce Department reported Friday.

And bilateral US deficits widened with China, the European Union, Canada and Mexico, all trading partners that have retaliated against President Donald Trump's multi-front global trade war.

Shortly before the numbers were released, Beijing warned it was ready to impose new tariffs on $60 billion in American products, responding to Trump's plans to jack up the punitive duties on the next $200 billion in Chinese goods to be targeted.

The White House quickly fired back, calling Beijing's latest counter-threat "weak." Top economic aide Larry Kudlow warned China it "better not underestimate" Trump's resolve in the conflict.

The US trade deficit rose 7.3 percent or $3.2 billion in June to $46.3 billion, overshooting analyst expectations in the largest jump since November 2016, according to the Commerce Department.

The result could weigh on revised calculations of second quarter growth in the United States, which Trump hailed as a key achievement last week after it was reported as the strongest GDP increase in nearly four years.

In May, a rush by Chinese importers to beat Beijing's looming counter-tariffs led to a surge in US exports of crude oil and soybeans, temporarily driving down the deficit and boosting GDP growth in the April-June period.