The U.S. trade deficit fell in July as imports declined slightly and exports rose to the highest level in 10 months, a possible sign that global demand for American products is starting to rebound.

The Commerce Department says the deficit declined to $39.5 billion, 11.6 percent lower than June's $44.7 billion deficit. Imports dropped 0.8 percent to $225.8 billion, reflecting in part lower oil imports. Exports climbed 1.9 percent to $186.3 billion, the highest level since last September, led by increased sales of American farm products.

The politically sensitive deficit with China increased 1.9 percent to $30.3 billion, the highest level since November. Republican presidential nominee Donald Trump has accused China of engaging in unfair trade practices which he says have cost millions of American jobs.