The U.S. goods trade deficit jumped to a 14-month high in May as a big rise in imports outpaced falling exports, a shift driven by companies stockpiling ahead of supply shocks and a surge in import-heavy investment tied to artificial intelligence. This combination widened the gap sharply, pointing to a renewed drag on quarterly GDP even as relief in Middle East shipping and lower oil prices eased one immediate pressure. The data show where the pressure points are: autos and consumer goods led the import wave, capital equipment climbed on AI spending, and exports slipped across several categories. Policymakers and markets will watch whether services and exports can respond to offset the heavy flow of imported equipment.
May’s numbers revealed a clear tilt toward imports, a pattern businesses say reflects forward buying to dodge shortages and price spikes tied to geopolitical disruptions. Surveys of firms found front-loading of orders, a defensive move after shipping through key waterways faced interruptions and commodity prices rose. The Commerce Department’s latest release captured both the import surge and a noticeable fall in shipments out of the country, underlining a twin effect hitting the trade balance. That mix is central to why the deficit widened so abruptly in a single month.
Part of the import story is tied to global instability that briefly bumped up costs and delayed shipping, especially through the Strait of Hormuz. After a preliminary peace arrangement between the United States and Iran, transit through the strait recovered and oil prices fell, easing one immediate inflationary pressure. Still, analysts caution that a longer-term structural factor will keep import volumes elevated: major firms are buying large amounts of foreign-made equipment tied to the AI investment boom. That pattern points to a persistent trade deficit even if short-term risks subside.
“The widening trade deficit is bad news for national income growth, and it suggests that net exports might drag down real GDP growth too,” said Carl Weinberg, chief economist at High Frequency Economics. “The AI boom had better generate a corresponding increase in services exports to offset the influx of equipment. If it doesn’t, then this AI bubble is a losing proposition for the economy.” Those comments underline a central risk: if imported capital goods do not lead to higher service exports or domestic value creation, the net impact on growth can be negative.
The headline figures were stark. The goods trade gap widened 27.4 percent to $105.8 billion in May, the highest since March 2025, a sizable miss versus the median forecast economists submitted to Reuters of $85.0 billion. That jump is a reminder that monthly swings in trade flows can quickly shift the macro picture and that headline GDP outcomes will likely feel the effect. Forecasts for second quarter growth are being revised with this fresh data in mind.
Imports of goods climbed $10.9 billion, or 3.6 percent, to $313.4 billion, also a 14-month peak. A 6.3 percent surge in automotive vehicle imports was a major contributor, while consumer goods imports jumped 5.7 percent, signaling resilient household demand despite recent inflation. Analysts point to factors such as larger-than-usual tax refunds and a buoyant stock market that have helped keep consumer spending solid even as prices rose.
Broad-based import gains showed up across categories. Industrial supplies, which include petroleum, rose 4.8 percent as energy flows responded to shifting global conditions. Capital goods imports edged up 0.4 percent month on month but surged 41.9 percent year on year, reflecting heavy AI-related spending on equipment that is largely imported. Imports of foods, feeds, and beverages increased 4.3 percent, while other goods climbed 11.5 percent, demonstrating that tariffs and past trade measures have not reversed the overall upward trend in inbound shipments.
On the export side, goods shipments fell $11.8 billion, or 5.4 percent, to $207.7 billion in May, with consumer goods exports tacking on a 9.2 percent drop. Industrial supplies exports tumbled 7.0 percent, and capital goods exports fell 5.0 percent, widening the gap created by rising imports. Some export categories bucked the trend: food, feed, and beverage exports rose 3.9 percent and automotive vehicle exports inched up 0.5 percent, but those gains were not enough to offset the overall decline.
“Imports are moving sharply higher and this will subtract from GDP growth this quarter,” said Christopher Rupkey, chief economist at FWDBONDS. “The import drag on domestic economic growth is back because factories here cannot make it here no matter how Washington economic officials try to spin it.” Trade had already acted as a drag across recent quarters, and these figures suggest that unless exports or services earnings pick up, the coming GDP prints may look softer than previously expected.
