Analysts at Wells Fargo note that the data released today, which showed the U.S. trade deficit narrowed to $54.0 billion in July, do not reflect the most recent escalation in the US-China trade war. 

• “With global growth weakening, goods exports are slowing on trend, and not just to China. The export orders component of the ISM manufacturing index suggests exports are set to slow further in coming months.
• The most recent escalation of a 15% tariff on $111B of imports from China that was announced in August went into effect on Sunday. That means the new tranche in the trade war, which affects mostly consumer products, did not affect trade in July.
• There is no denying the trade war is reducing trade flows. Given weakening global growth and further escalation in the trade war set to take place, we do not expect much relief for global trade.”