May’s 27.4% jump in the US goods trade deficit signals potential drag on Q2 GDP growth amid rising imports and falling exports.
The US goods trade deficit expanded 27.4% to $105.8 billion in May, reaching its highest level in 14 months. The surge in imports, driven by businesses stockpiling goods to avoid supply disruptions, outpaced a decline in exports, worsening the trade imbalance.
Economists had expected a narrower deficit, but front-loaded orders tied to Middle East tensions and AI-driven demand for imported equipment kept the gap elevated. Prior to May, the deficit stood at $85.0 billion, with exports also under pressure from weaker global demand.
The widening deficit is expected to weigh on second-quarter GDP growth, though recent easing in oil prices and improved shipping flows could provide some relief. Analysts warn that sustained import reliance for AI investments may keep the trade gap wide unless offset by stronger services exports.