US Goods Trade Deficit Jumps Sharply on War-Fueled Surge in Imports

America’s goods trade deficit widened in May, driven by U.S. companies bringing forward imports to avoid anticipated war-related product shortages and rising costs.The merchandise trade gap widened 27.4 percent to $105.8 billion, from $83 billion in April, according to data from the Commerce Department’s Census Bureau released on June 26.This represented the highest deficit since March 2025.Economists had penciled in an $85 billion shortfall.Imports increased by almost 4 percent, or $10.9 billion, to $313.4 billion last month.Consumer goods and industrial supplies accounted for much of the increase, rising by nearly 6 percent and 5 percent, respectively. The foods, feeds, and beverages category rose more than 4 percent.Meanwhile, U.S. companies bolstered their purchases of foreign goods to avoid higher prices and product shortages, driven by the conflict in Iran that had closed the Strait of Hormuz.Tehran has repeatedly threatened to close the Gulf channel since the United States and Iran extended their ceasefire. Additionally, there have been reports of cargo attacks.In addition to crude oil, gasoline, and other petroleum products, the narrow waterway handles a broad array of daily goods, including pharmaceuticals, fertilizer, and construction supplies.As of June 26, Marine Traffic data indicate that commercial vessels, including oil tankers and other ships, are transiting the global chokepoint.But while imports surged last month, U.S. goods shipments to foreign markets slowed.Exports declined by about 6 percent, or $11.8 billion, to $207.7 billion.Shipments of consumer goods declined more than 9 percent, and industrial supplies tumbled 7 percent.Latest trade figures could signal what might happen to second-quarter growth figures.Net trade dragged down first-quarter growth, though it was modest. Net exports—exports add to gross domestic product because they are a positive to national accounts—subtracted 0.37 percentage points from real GDP growth in the January–March period.The economy expanded 2.1 percent in the first three months of 2026, according to the final estimate from the Bureau of Economic Analysis, released on June 25. This is up from the 0.5 percent increase registered in the fourth quarter.Truckers transport cargo in the Port of Long Beach, Calif., on Nov. 29, 2023. John Fredricks/The Epoch TimesThe Atlanta Federal Reserve’s widely watched GDPNow Model projects that growth could come in at 2.5 percent in the second quarter, with net exports trimming 0.59 percent from the rate.In the first five months of 2026, the cumulative goods deficit totaled approximately $435 billion, down 31 percent year over year.Bringing down the trade deficit was central to President Donald Trump’s tariff rationale.Trump recently touted his administration’s efforts to reduce the trade deficit, saying that “we have the biggest trade deficit cut in the history of our country.”“That’s why you have all these factories being built,” Trump said during a June 24 speech in eastern Pennsylvania.“We are the hottest country in the world by a lot. I stood up to the trade cheaters, abusers, and violators of the world like no president has ever before. Now I am standing up again because Iran cannot have a nuclear weapon.”He cited the double-digit tariffs on imports of aluminum, copper, steel, and automobiles.Despite the Supreme Court striking down the president’s sweeping tariffs, the U.S. continues to collect sizable revenues from import duties.As of June 23, the United States has generated more than $23 billion this month, bringing the fiscal year-to-date total to around $253 billion, according to the Treasury Department.Under Section 122, Trump imposed a blanket universal 10 percent tariff. The president had threatened a 15 percent rate, but there has been no executive order raising the global levy.Treasury Secretary Scott Bessent reaffirmed the administration’s commitment to rebalance international trade and rectify unfair practices.“I would say the good thing about having used [International Emergency Economic Powers Act] in 2025, it allowed us very quickly to get to tariff deals or trade deals that we never would have gotten to before,” he said in a June 24 interview with CNBC’s “Squawk Box.”He alluded to the trade agreement between the United States and the European Union, which led the bloc to dismantle its non-monetary trade barriers and “unfair financing practices.” Similar developments are occurring in China, Japan, and South Korea, Bessent added.Washington is currently involved in tense trade negotiations with India, Canada, and Mexico.