US merchandise trade deficit rises to $105.8B in May

The United States merchandise trade deficit surged to a 14-month high in May as imports climbed and exports fell, a development that is expected to weigh on economic growth in the second quarter. The Commerce Department reported on Friday that the goods trade gap widened by 27.4 percent to $105.8 billion, the largest deficit since March 2025 and significantly above the $85 billion forecast by economists.

The sharp deterioration was driven by a $10.9 billion increase in goods imports, which rose 3.6 percent to $313.4 billion, and an $11.8 billion drop in exports, which fell 5.4 percent to $207.7 billion. Economists pointed to businesses front-loading orders to avoid potential shortages and price spikes stemming from the recent conflict in the Middle East, which had disrupted shipping through the Strait of Hormuz and raised commodity prices. Recent progress in U.S.-Iran peace negotiations has since allowed shipments through the strait to pick up and oil prices to fall.

Imports saw broad-based gains, with automotive vehicle imports jumping 6.3 percent and consumer goods imports soaring 5.7 percent. Capital goods imports, which include computers, semiconductors, and...