U.S. Trade Deficit Widens to $77.6 Billion in May as Exports Slide

The U.S. international trade deficit in goods and services widened sharply in May, climbing to $77.6 billion from a revised $54.6 billion in April. The $23.0 billion deterioration — a 42.2 percent jump in a single month — snapped a run of improvement that had carried the gap well below the record $133.0 billion shortfall reached in March 2025. The reversal was almost entirely a goods-side story, and both halves of the gross-flow ledger moved against the balance at once: exports fell while imports rose.

Goods Deficit Drives the Widening

The monthly deterioration was concentrated in merchandise trade. The goods deficit expanded $23.6 billion to $106.5 billion, while the services surplus edged up just $0.6 billion to $28.9 billion, extending its slow, steady grind higher. Collapsing the two into a single headline would obscure the split: services continue to run a durable surplus even as the goods gap does the heavy lifting on the downside.

Even after smoothing out the monthly noise, the trend is turning. The three-month moving average of the deficit rose $7.5 billion to $62.9 billion for the period ending in May, up from the lows reached earlier in the year. In inflation-adjusted terms, the real goods deficit increased 18.7 percent to $100.0 billion, a smaller percentage move than the 28.8 percent jump in the nominal goods gap — a reminder that price effects flattered part of the nominal swing.

Exports Retreat While Imports Climb

Total exports fell $10.5 billion to $317.7 billion, a 3.2 percent decline, with the weakness entirely in goods: merchandise exports dropped $11.3 billion to $210.6 billion, while services exports actually rose $0.8 billion to $107.1 billion. The goods-export pullback was concentrated in a handful of high-value categories:

• Industrial supplies and materials: down $5.5 billion, as a $6.2 billion drop in nonmonetary gold overwhelmed a $2.0 billion increase in crude oil
• Capital goods: down $3.5 billion, led by declines in computers ($2.1 billion) and computer accessories ($2.0 billion)
• Consumer goods: down $2.1 billion, including a $0.9 billion drop in pharmaceutical preparations

That gold swing deserves an asterisk. When these figures feed the national accounts, BEA strips out nonmonetary gold and replaces it with an adjustment based on domestic production and industrial use, so the $6.2 billion export decline that dominated the headline goods number will not pass one-for-one into GDP.

• Imports, by contrast, rose $12.5 billion to $395.3 billion, up 3.3 percent,

• goods imports climbing $12.3 billion to $317.0 billion

• services imports up $0.2 billion to $78.2 billion. The gains were broad:

• Consumer goods: up $3.5 billion, led by pharmaceutical preparations ($1.9 billion) and cell phones and other household goods ($1.0 billion)

• Industrial supplies and materials: up $3.1 billion, including a $1.5 billion rise in crude oil

• Automotive vehicles, parts, and engines: up $2.2 billion, with passenger cars accounting for $1.0 billion

• Capital goods: up $1.1 billion, as gains in computer accessories ($1.2 billion) and semiconductors ($1.0 billion) outweighed a $3.4 billion drop in computers

The composition matters for interpreting the print. A deficit that widens because imports are surging usually signals firm domestic demand, and imports of consumer goods, autos, and industrial materials all advanced. But the export side was dragged down by gold and computer hardware — categories that pivot on financial and inventory flows rather than underlying foreign appetite for U.S. output — which muddies the cleaner "strong demand" read.

Trading Partners: Mexico Widens, Switzerland Flips

Two bilateral shifts stood out in the May detail.

• The deficit with Mexico widened $5.3 billion to $20.1 billion, as U.S. exports south of the border fell $1.5 billion to $33.4 billion and imports rose $3.9 billion to $53.5 billion.
• The balance with Switzerland flipped outright, swinging from a $4.4 billion surplus in April to a $2.3 billion deficit in May as exports to Switzerland collapsed $6.9 billion to $2.0 billion — a move that lines up with the drop in gold and precious-metals shipments.
• The deficit with France narrowed $0.9 billion to $1.5 billion.

The month's largest goods deficits, by partner:

• Vietnam: $20.6 billion
• Mexico: $20.1 billion
• Taiwan: $19.4 billion
• China: $14.5 billion
• European Union: $9.3 billion

On the other side of the ledger, the Netherlands ($9.1 billion) and Hong Kong ($5.6 billion) remained the largest bilateral surpluses.

What It Means for Second-Quarter GDP

Net exports enter GDP directly, and a trade gap that widened this much in May points to a negative contribution from the external sector as the second quarter closed — the kind of monthly surprise that feeds straight into real-time estimates like the Atlanta Fed's GDPNow tracker. The partial offset is the same gold quirk noted above: because BEA neutralizes the nonmonetary-gold flows that drove much of May's export drop, the drag on measured GDP will be smaller than the $23.6 billion goods-deficit deterioration implies.

It is also worth keeping one month in perspective. Year-to-date, the goods and services deficit is still down $203.9 billion, or 40.6 percent, from the same period in 2025, with exports up $164.7 billion (11.7 percent) even as imports fell $39.2 billion (2.1 percent). May widened the gap, but the year as a whole remains far narrower than 2025.

The next release, covering June trade, is scheduled for August 4. The number to watch is goods exports: if May's slide was largely the one-off unwinding of gold and computer shipments, June should show a partial rebound and pull the overall deficit back toward its $62.9 billion three-month average. A second straight month of falling exports and rising imports would instead confirm that May marked a genuine turn in the trade balance rather than a gold-driven head fake.