Trade deficit increased slightly in July

The nation's trade deficit increased slightly in July, with drops in exports and imports. 

The gap increased to $42 billion, up 0.2 percent but below estimates, from a revised $41.9 billion in June, the Commerce Department reported Tuesday. 

Exports, which fell 1 percent to $183.3 billion from $185.1 in June, had been on the rise since April. Demand decreased for auto parts and engines and increased for food, feeds and beverages. 

Meanwhile, imports dropped $225.3 billion, by 0.8 percent, on a large drop in oil imports. 

The gap was $45.6 billion the same month last year. 

There are concerns and expectations that the gap could widen further into the year with the economic slowdown in Asia, especially in China, and Europe's continuing fiscal crisis and looming recession. 

A wider trade deficit will sap U.S. economic growth, which was last estimated at an anemic 1.7 percent for the second quarter.

Meanwhile, the deficit continued to tick up, widening to $29.4 billion, a 7.2 percent increase, remaining the biggest gap with any country.