Soaring imports push U.S. trade deficit to five-month high, likely spurred by increasing China tariffs

In May, goods imports increased 4.0 per cent to $217.0 billion. Imports of consumer goods rose $1.4 billion, while those of motor vehicle and parts soared $2.3 billion to a record high. There were also big increases in imports of capital goods and industrial supplies and materials.

Goods exports rose 2.8 per cent to $140.8 billion. Exports of consumer goods increased $0.8 billion and soybean exports advanced $0.7 billion. Civilian aircraft exports rose $0.5 billion. Gains are, however, likely to be capped after Boeing in March suspended deliveries of its fastest-selling MAX 737 jetliner. The aircraft was grounded indefinitely following two deadly crashes in five months. Production of the troubled plane has been cut.

When adjusted for inflation, the goods trade deficit increased $4.8 billion to $87.0 billion in May. The increase in the so-called real goods trade deficit suggests that trade could be a drag on second-quarter gross domestic product. Trade contributed 0.94 percentage point to the economy’s 3.1 per cent annualized growth pace in the first quarter. The Atlanta Fed is forecasting gross domestic product rising at a 1.5 per cent rate in the April-June quarter.

The wider trade deficit added to weak housing, manufacturing, business investment and moderate consumer spending in offering a downbeat assessment of the economy.

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