US trade deficit widens sharply in May

The U.S. trade deficit widened sharply in May 2026, jumping 42.2% to $77.6 billion, the highest level since March 2025. Imports rose 3.3% to $395.3 billion, driven by a record $128.0 billion in capital goods imports fueled by artificial intelligence investment. Exports fell 3.2% to $317.7 billion due to a strong dollar and declines in capital goods, consumer goods, and industrial supplies. The goods trade deficit widened 28.4% to $106.5 billion. Economists expect the wider trade gap to subtract about 1.7 percentage points from second-quarter GDP growth. The deficit was also influenced by businesses front-loading imports to avoid shortages and higher prices related to the Middle East conflict, and by the U.S.-led war with Iran, which boosted U.S. petroleum exports to a record high. The U.S. continued to run goods trade deficits with countries including Vietnam, Mexico, China, Canada, Germany, South Korea, India, Republic of Ireland, and Taiwan, despite tariffs imposed by President Donald Trump. The U.S. Supreme Court struck down earlier tariffs, but the White House responded with new duties. The Atlanta United States — Federal Reserve's model forecasts GDP increasing at a 1.2-1.4% annualized rate in the second quarter.