US Trade Deficit Widens to Highest Level in More Than a Year

By Staff, Agencies

The US trade deficit widened sharply in May, reaching its highest level in more than a year as imports increased while exports declined, according to US Commerce Department data cited by AFP.

The overall trade gap rose 42.2% from the previous month to $77.6 billion, slightly below market expectations cited by Briefing.com.

Imports climbed 3.3% to $395.3 billion, while exports fell 3.2% to $317.7 billion, reflecting strong domestic demand and efforts by businesses to accelerate imports ahead of new US tariffs.

Economists noted that the wider trade deficit could weigh on US economic growth because a larger gap between imports and exports reduces gross domestic product.

They also warned that higher import costs resulting from tariffs could eventually be passed on to consumers through increased prices.

Analysts said the rise in imports was broad-based, with consumer goods accounting for a significant share of the increase.

Grace Zwemmer, an economist at Oxford Economics, said imports of capital goods, including computer accessories and semiconductors, posted only modest monthly gains but were 42% higher than a year earlier, driven by sustained demand for artificial intelligence hardware.

Zwemmer added that pharmaceutical products were a major contributor to the increase in imports, accounting for roughly half of the monthly rise.

She suggested that companies may be accelerating pharmaceutical imports ahead of the planned introduction of 100% tariffs on July 31, despite exemptions included in the policy.

Analysts warned that rising pharmaceutical import costs could place additional financial pressure on US households if businesses pass higher tariff-related expenses on to consumers.