{"id":3067,"date":"2026-06-27T07:37:58","date_gmt":"2026-06-27T07:37:58","guid":{"rendered":"https:\/\/reliablemovingcrews.com\/?p=3067"},"modified":"2026-06-27T07:37:58","modified_gmt":"2026-06-27T07:37:58","slug":"surge-in-imports-drives-us-goods-trade-deficit-to-14-month-high-in-may","status":"publish","type":"post","link":"https:\/\/reliablemovingcrews.com\/?p=3067","title":{"rendered":"Surge in imports drives US goods trade deficit to 14-month high in May"},"content":{"rendered":"<div>\n<div>\n<div>\n<ul>\n<li>Summary<\/li>\n<\/ul>\n<\/div>\n<div><\/div>\n<\/div>\n<div>WASHINGTON, June 26 (Reuters) &#8211; The U.S. trade deficit in goods swelled to a 14-month high in May as businesses boosted imports, likely to avoid shortages and higher prices related \u200bto the war in the Middle East, prompting economists to cut their growth estimates for the second quarter.<\/div>\n<div>The sharp deterioration in the goods trade deficit, reported \u200cby the Commerce Department on Friday, also reflected a decline in exports. Recent business surveys have shown front-loading of orders by firms. Sponsors of the surveys attributed the behavior to the U.S.-led war against Iran, which raised the prices of oil, fertilizers and other commodities and disrupted shipping in the Strait of Hormuz.<\/div>\n<div>But after the U.S. and Iran last week signed a preliminary peace deal, shipments through the strait have picked up, driving oil prices sharply \u200blower. Even if supply chains returned to normal, economists warned that the trade deficit would likely remain elevated because of an artificial intelligence investment boom that is heavily \u200breliant on imports.<\/div>\n<div>&#8220;The widening trade deficit is bad news for national income growth, and it suggests that net exports might drag down real \u2060GDP growth too,&#8221; said Carl Weinberg, chief economist at High Frequency Economics. &#8220;The AI boom had better generate a corresponding increase in services exports to offset the influx of equipment. If \u200bit doesn&#8217;t, then this AI bubble is a losing proposition for the economy.&#8221;<\/div>\n<div>The goods trade gap increased 27.4% to $105.8 billion last month, the highest level since March 2025, the Commerce Department&#8217;s Census \u200bBureau said. Economists polled by Reuters had forecast the deficit would be $85.0 billion.<\/div>\n<div>Imports of goods increased $10.9 billion, or 3.6%, to $313.4 billion, also a 14-month high. They were driven by a 6.3% surge in imports of automotive vehicles. Imports of consumer goods soared 5.7%. Despite high inflation and household expectations that price pressures, mostly stemming from the Iran war, would remain elevated, consumer spending has stayed strong, thanks to large tax refunds this year and a stock market \u200brally.<\/div>\n<div>The dollar slipped against a basket of currencies on Friday. U.S. Treasury yields were mostly lower.<\/div>\n<h2>BROAD INCREASE IN IMPORTS<\/h2>\n<div>Imports of industrial supplies, which include petroleum, increased 4.8%. Capital goods imports \u200brose 0.4%. They surged 41.9% on a year-over-year basis, reflecting the AI spending spree.<\/div>\n<div>Imports of foods, feeds and beverages increased 4.3%, while those of other goods advanced 11.5%.<\/div>\n<div>Overall imports have remained high despite tariffs imposed \u200cby the \u2060Trump administration. President Donald Trump has defended the duties as necessary to protect domestic manufacturing and reduce the trade deficit.<\/div>\n<div>Goods exports dropped $11.8 billion, or 5.4%, to $207.7 billion in May. They were weighed down by a 9.2% plunge in exports of consumer goods. Industrial supplies exports tumbled 7.0%, while those of capital goods dropped 5.0%. Exports of other goods decreased 6.8%. But food, feed and beverage exports increased 3.9%. Automotive vehicle exports rose 0.5%.<\/div>\n<div>&#8220;Imports are moving sharply higher and this will subtract from GDP growth this quarter,&#8221; said Christopher Rupkey, chief economist at FWDBONDS. &#8220;The import drag on \u200bdomestic economic growth is back because factories here \u200bcannot make it &#8230; no matter how Washington \u2060economic officials try to spin it.&#8221;<\/div>\n<div>Economists at Morgan Stanley slashed their second-quarter GDP growth estimate to a 2.1% annualized rate from an earlier 2.5% pace. Goldman Sachs lowered its estimate by 0.2 percentage points to a 2.2% rate. Trade had been a drag on gross domestic product \u200bfor two straight quarters.<\/div>\n<div>The economy grew at a 2.1% annualized rate last quarter after expanding at a 0.5% pace in the October-December \u200bquarter. Some of the imports \u2060ended up as inventory at businesses, which could limit the drag on GDP from the wider trade deficit.<\/div>\n<div>Wholesale inventories rose 0.3% in May after increasing 0.7% in April. Stocks at retailers climbed 0.6% after rising 0.7% in the prior month. Motor vehicle and parts inventories accelerated 1.0% after increasing 0.8% in April. Excluding motor vehicles and parts, retail inventories gained 0.4%. This category goes into the \u2060calculation of \u200bGDP. It increased 0.7% in April.<\/div>\n<div>Inventories have been drawn down for four straight quarters. They had no impact on GDP \u200bgrowth in the January-March quarter.<\/div>\n<div>&#8220;A pick-up in inventories looks set to offset about half the drag from net trade,&#8221; said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. &#8220;We still lack manufacturing inventories data for May, and all the data \u200bfor June. But for now, a positive contribution to GDP growth of about one percentage point looks likely.&#8221;<\/div>\n<\/div>\n<p>Read more <a href=\"https:\/\/reliablemovingcrews.com\/?p=3065\">Trump clean energy tax credit cutoff drives project rush as prices set to soar<\/a><\/p>\n<p>Read more <a href=\"https:\/\/reliablemovingcrews.com\/?p=3062\">Falling energy prices won\u2019t defuse rising risk of civil unrest in emerging markets<\/a><\/p>\n<p>Read more <a href=\"https:\/\/reliablemovingcrews.com\/?p=3060\">China\u2019s Geely to ship first Lotus EVs to Canada in July under Carney-Xi deal, ambassador says<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The U.S. trade deficit in goods swelled to a 14-month high in May as businesses boosted imports, likely to avoid shortages and higher prices related \u200bto the war in the Middle East, prompting economists to cut their growth estimates for the second quarter.<\/p>\n","protected":false},"author":1,"featured_media":3066,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[84],"class_list":["post-3067","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-business"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - 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