U.S. International Trade in Goods and Services, May 2025

The U.S. goods and services deficit widened significantly in May 2025, increasing $11.3 billion to $71.5 billion, an 18.7% rise from April's revised figures. This expansion was primarily driven by a 4.0% decline in exports to $279.0 billion, while imports saw only a marginal 0.1% decrease to $350.5 billion. Year-to-date, the deficit has surged 50.4% compared to the same period in 2024, reflecting a notable weakening in net trade that could impact Q2 GDP calculations and broader economic assessments.

Analysis

The U.S. trade deficit expanded significantly in May 2025, widening by $11.3 billion, or 18.7%, to $71.5 billion. This marked deterioration was overwhelmingly driven by a sharp 4.0% decrease in exports, which fell by $11.6 billion, while imports remained largely stable with a marginal 0.1% decline. The export weakness was concentrated in goods, particularly industrial supplies and materials which dropped by $10.0 billion, and capital goods, which fell $1.9 billion, suggesting a potential slowdown in global demand for U.S. products. On the import side, the data presents a mixed view of domestic demand; a $4.0 billion decrease in consumer goods imports was offset by robust increases in automotive vehicles (+$3.4 billion) and computers (+$4.4 billion). Critically for economic forecasting, the real goods deficit, which directly impacts GDP calculations, increased by 9.6% to $92.5 billion. The year-to-date trend underscores a persistent imbalance, with the total deficit surging 50.4% compared to the same period in 2024, as import growth has far outpaced export growth. Furthermore, shifting trade dynamics are evident, with the deficit with China narrowing by $5.7 billion while the deficit with Mexico widened by $3.6 billion.

Key Decisions for Investors

• Given the 9.6% increase in the real goods deficit, investors should anticipate that net exports will be a significant drag on Q2 2025 GDP growth, warranting a review of U.S. economic growth forecasts.
• The broad-based decline in U.S. exports, especially in industrial and capital goods, signals weakening global demand and could be a headwind for U.S. multinational industrials and potentially exert downward pressure on the dollar.
• Monitor upcoming consumer spending data to resolve the mixed signals from imports, as the decline in general consumer goods contrasts with strong demand for autos and computers, affecting outlooks for specific retail and technology sectors.
• The notable narrowing of the trade deficit with China alongside a widening deficit with Mexico highlights ongoing supply chain shifts, which could impact companies with significant operational or sales exposure to these corridors.