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The trade deficit expanded in May as both imports and exports weakened. The U.S. trade deficit in goods and services rose to a seasonally adjusted $71.5 billion, from a downwardly revised $60.3 billion in April. The main driver of the expansion was an $11.6 billion drop in exports.
The trade deficit is a measure of the difference between what the United States buys from foreign nations and what the country sells overseas. Year-to-date, exports have increased 5.5%, while imports have increased 14.8% from the same period a year ago. The White House’s trade policy has set monthly trade figures on a rocky course in 2025. While softening economic activity in advanced economies will weigh on demand for U.S. goods and services abroad, the recent weakness of the dollar may offset some of that weakness.
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Total exports fell 4% from the previous month. Goods exports fell 5.9%, led by a decline in industrial supplies and materials. The remaining drop in exports came from a 3.1% decline in capital goods. Exports of consumer goods rose 6.9%, thanks in part to an increase in outbound shipments of pharmaceutical preparations. Exports of services slipped 0.2% due to lower sales of travel and transportation services, which includes travel spending by foreign visitors in the United States. Exports of intellectual property increased, as did those of other business services.
Imports fell again in May. Total imports fell 0.1%, following a record decline in April. Goods imports fell slightly, with a decline in imported consumer goods and industrial supplies offset by increases in auto, capital goods and “other” imports. Imports of services fell 0.2% on the back of weaker travel and transports imports.
The U.S. trade balance has markedly improved in the second quarter, compared with the first. This means that trade will likely provide a positive contribution to GDP growth in the second quarter, after shaving off a few percentage points from GDP in the first quarter.
Source: Bureau of Economic Analysis
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