Why This Matters to Distributors: Rising imports of industrial supplies, consumer goods and automotive products point to continued inventory replenishment across portions of the supply chain. At the same time, weaker exports and a wider trade deficit underscore ongoing uncertainty in global demand and could increase pressure on inventory management, freight costs, and warehouse capacity.
The U.S. trade deficit widened sharply in May as imports increased and exports declined, reversing much of April’s improvement and reflecting renewed strength in goods imports.
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis reported Tuesday that the U.S. goods and services trade deficit increased to $77.6 billion in May, up 42.2% from a revised $54.6 billion in April. Exports fell 3.2% to $317.7 billion, while imports rose 3.3% to $395.3 billion.
The increase was driven by a wider goods deficit, which grew $23.6 billion to $106.5 billion. The U.S. services surplus increased $0.6 billion to $28.9 billion.
Goods exports fell $11.3 billion to $210.6 billion, led by declines in industrial supplies and materials, capital goods, and consumer goods. Exports of non-monetary gold dropped $6.2 billion, while exports of computers fell $2.1 billion and computer accessories declined $2.0 billion. Crude oil exports partially offset those losses, increasing $2.0 billion.
Services exports rose $0.8 billion to $107.1 billion, driven by gains in travel, transportation, financial services, and other business services.
Goods imports increased $12.3 billion to $317.0 billion, led by higher shipments of consumer goods, industrial supplies, automotive products, and capital equipment. Consumer goods imports rose $3.5 billion, including a $1.9 billion increase in pharmaceutical preparations. Imports of industrial supplies and materials increased $3.1 billion, while automotive vehicles, parts and engines rose $2.2 billion. Capital goods imports increased $1.1 billion, reflecting higher imports of computer accessories and semiconductors.
Despite the monthly increase, the U.S. trade balance remained significantly improved from a year earlier. Through the first five months of 2026, the goods and services deficit were 40.6% lower than during the same period in 2025. Year-to-date exports increased 11.7%, while imports declined 2.1%.
On a three-month moving average basis, the trade deficit increased to $62.9 billion, as import growth continued to outpace exports.
Among major trading partners, the largest U.S. goods trade deficits in May were with Vietnam ($20.6 billion), Mexico ($20.1 billion), Taiwan ($19.4 billion), and China ($14.5 billion).
The deficit with Mexico widened $5.3 billion to $20.1 billion as exports to Mexico declined $1.5 billion and imports increased $3.9 billion. Trade with Switzerland shifted from a $4.4 billion surplus in April to a $2.3 billion deficit in May after U.S. exports to Switzerland fell $6.9 billion.
Adjusted for inflation, the real goods deficit increased 18.7% to $100.0 billion. Real goods exports declined 6.6%, while real goods imports increased 1.9%, indicating the widening deficit reflected changes in trade volumes rather than prices.
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