Surge in imports drives US goods trade deficit to 14-month high in May

The U.S. goods trade deficit widened to a 14-month high in May as imports surged, a shift economists linked to efforts by businesses to avoid shortages and higher prices connected to the war in the Middle East. The Commerce Department reported the deterioration was also accompanied by a decline in exports, and analysts cut their growth estimates for the second quarter. Import growth reflected front-loading of orders in surveys and disruption tied to the U.S.-led conflict involving Iran, which had raised costs for oil, fertilizers and other commodities and affected shipping through the Strait of Hormuz. After the U.S. and Iran signed a preliminary peace deal last week, shipments through the strait increased and oil prices fell sharply, but economists warned the deficit could stay elevated due to an AI investment boom reliant on imports. The goods gap rose 27.4% to $105.8 billion, above a Reuters forecast of $85.0 billion. Imports climbed 3.6% to $313.4 billion, driven by a 6.3% jump in automotive vehicle imports and a 5.7% rise in consumer goods. Goods exports fell 5.4% to $207.7 billion, including a 9.2% drop in consumer goods exports.