May Trade Deficit Widens Sharply Amid Slumping Gold Exports and Broad Import Gains
The expansion in the trade deficit to its widest level since March 2025 reflects a steep drop in nonmonetary gold shipments, alongside strong consumer and automotive imports.
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The U.S. trade deficit widened sharply in May, rising to $77.6 billion from a revised $54.6 billion in April — a 42.2% increase. The $23.0 billion expansion reversed the narrowing seen in the prior month and marked the widest trade gap since March 2025. This deterioration was driven by a 3.3% increase in imports that combined with a 3.2% decline in exports. Trade data have been volatile during President Trump’s second term, with shifting tariff policies and a Supreme Court ruling that limited the president’s ability to impose broad duties on most foreign countries.
The larger rise in inbound shipments relative to outbound ones is expected to act as a drag on the second quarter’s GDP growth. However, even with the sharp widening in May, the year-to-date trade deficit for 2026 remains 40.6% smaller than during the same period in 2025.
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Volatile Gold and Petroleum Shipments Shape Export Totals
The underlying details of the May trade report show that energy and nonmonetary gold (gold not held as a reserve asset by monetary authorities) continue to heavily influence export figures. U.S. exports of petroleum and petroleum products rose further, climbing by $1.7 billion during the month to $38.4 billion.
Meanwhile, nonmonetary gold continued to create massive swings in net trade. May exports of nonmonetary gold plummeted by $6.1 billion, extending declines after a run-up earlier in the year. This contraction drove a $5.5 billion reduction in overall industrial supplies exports.
Because these volatile shifts in gold trade do not reflect final demand for goods and frequently mirror speculative financial asset allocations, the Bureau of Economic Analysis excludes nonmonetary gold when calculating core GDP figures. Doing so helps buffer real GDP estimates from the full nominal drag of May's trade imbalance.
Consumer Goods and Automotives Fuel Rebound in Goods Imports
The expansion in May imports was broad-based, spearheaded by consumer items and automotive products. Total imports rose to $395.3 billion, led by a $3.5 billion surge in consumer goods — primarily pharmaceutical preparations and cell phones. Automotive vehicles, engine and parts imports also climbed, rising by $2.2 billion to reach $36.9 billion.
Inbound shipments of industrial supplies rose by $3.1 billion, with half of that growth coming from stronger crude oil imports. Rising global oil prices drove nominal crude imports up $1.5 billion, despite a decline in real petroleum import volumes.
Meanwhile, capital goods imports excluding autos fell by $3.5 billion, to $66.9 billion. Even with this slight monthly pullback, computers, computer accessories and semiconductor imports remained highly elevated, accounting for approximately 20% of all goods imports in May amid the ongoing artificial intelligence tech build-out.
Tariff Adjustments and Trade Diversion Cause Big Swings with Major Trade Partners
The trade environment continues to adjust to shifting global trade policies, tariff implementation and trade diversion. The U.S. effective tariff rate on imported goods sat at approximately 6.9% in May. This declining rate reflects:
- Shifts in import shares due to trade diverting to non-U.S. alternatives
- The legal impacts of Supreme Court rulings on IEEPA tariffs
- The fact that the share of dutiable goods in overall imports remained well below 50% (at 42.3%) in May
These dynamics have reshaped bilateral balances. U.S. trade deficits with Vietnam ($20.6 billion) and Mexico ($20.1 billion) have widened, while the deficit with China ($14.5 billion) has narrowed. Additionally, Switzerland flipped from a $4.4 billion surplus in April to a $2.3 billion deficit in May, as Swiss exports collapsed by $6.9 billion due to the drop in gold and precious metals trade.
Source: Bureau of Economic Analysis
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