AI<\/a>, whose buildup \u2060is heavily reliant on imports. There were also increases in imports of civilian aircraft and parts as well as generators, accessories and industrial engines. <\/p>\nHigher capital goods imports typically imply strong business investment, but economists said rising prices made it difficult to estimate the impact. When adjusted for inflation, capital goods imports fell to $108.7 billion from $110.5 billion in April. <\/p>\n
Story Continues <\/p>\n
“And while AI investment is likely to remain strong, imports of computers and related equipment have slowed in second-quarter data so far, suggesting potentially less of a \u200bboost \u200bto GDP growth from AI-related components compared to recent quarters,” said Veronica Clark, an economist at Citigroup. <\/p>\n
Imports of industrial supplies and \u200bmaterials, which include petroleum, increased $3.1 billion, with crude oil imports rising $1.5 billion. Consumer goods \u200cimports rose $3.5 billion amid increases in pharmaceutical preparations, cellphones and other household goods, portending an acceleration in spending after it nearly braked in the first quarter. <\/p>\n
Imports of motor vehicles, parts and engines increased $2.2 billion, mostly reflecting passenger cars. Imports of other goods rose $1.4 billion to a record $15.3 billion, also supporting expectations for stronger consumer spending. <\/p>\n
EXPORTS DECREASE ACROSS THE BOARD <\/p>\n
But exports dropped 3.2% to $317.7 billion, also because of the strong dollar, which is making U.S.-made goods more expensive on the international market. Goods exports tumbled 5.1% to $210.6 billion, pulled down by a decline of $3.5 billion in capital goods as shipments of computers and computer accessories decreased. <\/p>\n
Consumer goods exports dropped $2.1 billion, with shipments of pharmaceutical preparations falling. Exports of industrial supplies and materials decreased $5.5 billion, largely due to declines in non-monetary gold, which is excluded in the calculation of GDP. Some economists saw a smaller drag on GDP as a result. Shipments of other \u200cprecious metals also fell. <\/p>\n
Natural gas exports slipped $1.1 billion. But crude oil shipments increased $2.0 billion, with petroleum exports rising to a record \u200bhigh $38.4 billion. The U.S. is a net oil exporter. <\/p>\n
The goods trade deficit widened 28.4% to $106.5 billion, also the highest level since March \u200b2025. When adjusted for inflation, the goods trade shortfall rose 18.7% to $100.0 billion. <\/p>\n
Trade has subtracted from GDP \u200bfor two straight quarters. The Atlanta Federal Reserve’s model is currently forecasting GDP will increase at a 1.4% annualized rate in the second quarter. The economy grew at a 2.1% \u200cpace in the January-March quarter. <\/p>\n
“From a GDP accounting perspective for the second quarter, the \u200bwider trade gap looks likely to ‘subtract’ about 1.7 percentage points \u200bfrom second-quarter real GDP growth,” said John Ryding, chief economic advisor at Brean Capital. <\/p>\n
The U.S. continued to run goods trade deficits with a range of countries, including Vietnam, Mexico, Taiwan, China, Canada, Germany, South Korea, India and Ireland, despite Trump’s tariffs. The U.S. has declined to extend the U.S.-Mexico-Canada Agreement without changes, and economists said swelling deficits would make the negotiations tougher. <\/p>\n
But goods trade surpluses were posted with \u200ba number of countries, among them the Netherlands, Hong Kong, Australia, the United \u200cKingdom and Brazil. <\/p>\n
A small surplus was also recorded on the trade services balance, which rose to $28.9 billion from $28.3 billion in April. Exports of services increased $0.8 billion to a record high $107.1 billion, with \u200btravel accounting for most of the rise, though economists saw no boost yet from the FIFA World Cup tournament. They more than offset a $0.2 billion rise in service imports to an \u200ball-time high of $78.2 billion, mostly due to insurance services. <\/p>\n
(Reporting by Lucia Mutikani; Editing by Andrea Ricci and Paul Simao) <\/p>\n","protected":false},"excerpt":{"rendered":"By Lucia Mutikani WASHINGTON, July 7 (Reuters) – The U.S. trade deficit widened sharply in May as imports…\n","protected":false},"author":2,"featured_media":785290,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,51938,3687,29352,238286,182,164,81072,329495,294921,2425,76447,46431],"class_list":["post-785289","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-capital-goods","tag-commerce-department","tag-consumer-goods","tag-crude-oil-imports","tag-economic-growth","tag-economy","tag-gross-domestic-product","tag-household-goods","tag-oil-exports","tag-president-donald-trump","tag-trade-deficit","tag-u-s-supreme-court"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/785289","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=785289"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/785289\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/785290"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=785289"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=785289"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=785289"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}