The U.S. trade deficit in goods and services widened significantly in May, reaching $77.6 billion, as imports increased while exports declined, The New York Times reports.
According to the Commerce Department, exports fell 3.2% to $317.7 billion, while imports rose 3.3% to $395.3 billion. The rise in imports was driven largely by strong demand for electronics used in new data centers, along with continued purchases of foreign medicines and other goods.
As a result, the trade deficit, the difference between what the U.S. imports and exports, rose by more than 42% compared with the previous month.
The Trump administration has made reducing the trade deficit a key economic objective by imposing broad tariffs on imported goods. However, these tariffs have caused trade patterns to fluctuate rather than consistently shrink the deficit.
Although imports of some products have declined because of higher tariffs, continued U.S. demand for artificial intelligence-related technology, pharmaceuticals and other imported products has kept overall imports relatively strong.
International events have also affected trade. The conflict involving Iran and the temporary closure of the Strait of Hormuz disrupted global supply chains for oil, fertilizer, packaging materials and helium. In April, these disruptions unexpectedly helped the U.S. increase exports of oil and petroleum to record monthly levels, contributing to a temporary decline in the trade deficit before it widened again in May.
Businesses are also preparing for another round of changes in U.S. trade policy. Earlier this year, the Supreme Court struck down many of the broad global tariffs imposed by the Trump administration. In response, the administration introduced a temporary 10% tariff on imports from all trading partners, but this measure is expected to expire later this month because its legal authority is limited.
To replace the temporary tariff, the administration is preparing two new trade actions under Section 301 of U.S. trade law. One investigation focuses on countries that restrict imports of goods made without forced labor, while the other examines government policies that unfairly support domestic manufacturing industries. These investigations are expected to justify a new set of tariffs that could restore import duties to levels similar to those in place before the Supreme Court’s ruling.
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