U.S. May Advance Goods Trade - Exports slip, imports remain strong, negative for GDP
May’s advance goods US trade deficit of $105.8bn is a sharp deterioration from April’s $83.0bn and the widest deficit since a pre-tariff record of $158.7bn seen in March 2025. Exports plunged by 5.4% after four straight solid gains while imports increased by 3.6%, this the fourth straight solid gain.
Exports saw significant declines in four out of six categories, the largest a 9.2% fall in consumer goods, with industrial supplies, capital goods and other goods also down, Food and autos managed gains, the latter only marginally. Imports saw gains in all six categories, other goods at 11.5% leading.
The surge in the deficit is probably in part erratic with exports probably having been due for a correction and imports probably still due for a correction (though perhaps less so now that tariffs have been cut by the Supreme Court). However the data offsets the positive of an upward revision to Q1 GDP which was more than fully due to net exports (as imports were revised lower), and signals that the post-tariff improvement in the deficit is now probably done.
The trade data will reduce what had been shaping up to be positive Q2 GDP forecasts. Also relevant to GDP are advance May wholesale and retail inventories, up respectively 0.3% and 0.6%. The former is fairly neutral for GDP but the latter a modest positive, though unlikely to fully offset the negative coming from the trade data, with some of the inventory gain likely to be on prices.