The US trade deficit reaches its highest level in more than a year economy

The US trade deficit widened to its highest levels in more than a year in May, with imports rising and exports declining, in light of continued strong domestic demand and companies preparing for a new wave of tariffs, according to US Commerce Department data reported by Bloomberg.

The data showed that the deficit in trade in goods and services rose by 42.2% on a monthly basis to $77.6 billion, compared to expectations of $78.4 billion.

Imports jump before tariffs

US exports fell by 3.2% in May, hurt by a decline in non-monetary gold exports, while imports rose by 3.3% to their highest level since March 2025, before the implementation of broad tariffs announced by the administration of President Donald Trump.

BMO Capital Markets’ chief economist, Sal Guatieri, believes that American companies have rushed to increase imports in anticipation of the imposition of additional duties, supported by continued strong domestic demand and the rise of the dollar.

The data showed record growth in imports of capital goods, along with increases in imports of consumer goods, industrial materials, vehicles and spare parts, while imports of semiconductors and computer accessories continued to rise, in light of continued investment in data centers and artificial intelligence.

Implications for growth

Although oil exports continued to rise during May, Energy Information Administration data indicate that oil exports returned to their pre-war levels by the end of June.

Bloomberg Economics experts believe that the expansion of imports included sectors beyond artificial intelligence products, but the slowdown in real import growth indicates that underlying demand was less strong than what nominal data reflects.

Trade data is expected to negatively affect the growth of the US economy during the second quarter, as estimates by the Federal Reserve Bank in Atlanta indicate that net exports may subtract 1.62 percentage points from GDP growth, compared to 0.37 percentage points in the first quarter.

The data also showed that the trade deficit with Mexico and Vietnam expanded to record levels, and increased with Canada and China, while the trade deficit in goods, after accounting for inflation, reached $100 billion, the highest level since March 2025.