US May advance goods trade balance -105.8 billion vs -85.0 billion expected

• Prior was -82.4B
• Exports of goods for May were $207.7 billion, $11.8 billion less than April exports
• Imports of goods for May were $313.4 billion, $10.9 billion more than April imports

This is the worst since July 2025 and this will mean downgrades to Q2 growth estimates, including GDP trackers.

The US goods trade deficit widened sharply in the May advance release, blowing out to $105.8 billion from $83.0 billion in April. That's more than a $20 billion deterioration in a single month, and it came from both sides of the ledger — exports fell to $207.7 billion while imports rose to $313.4 billion. The deficit is also running wider than a year ago, when the May 2025 balance sat at $91.5 billion.

The instinct is to pin the import surge on the AI buildout, but the data doesn't support that read. Spending on data center gear and embedded semiconductors shows up in capital goods, and while capital goods imports stayed elevated, they didn't climb further. So the AI capex story is real, but it isn't what moved this print.

The bigger driver was the export side. Industrial supplies led the decline, falling to $82.7 billion from $89.0 billion, and that almost certainly traces back to gold. The trade numbers were artificially supported in Q1 by gold that had been pulled into the US ahead of tariff deadlines and then re-exported. That distortion is now unwinding, and the deficit is simply giving back what those one-offs had masked.

On the import side, autos and consumer goods — both soft in recent months — turned higher. The pharmaceutical angle is worth watching: US drug companies front-loaded inventory from Ireland last year to get ahead of tariffs, and those stockpiles are thinning out. As they rebuild, imports from Ireland come back, which adds to the total.

Underneath the monthly noise, the structural picture is what matters. A widening fiscal deficit, driven by softer tariff revenue and OBBBA refunds, combined with an AI investment boom increasingly financed by debt, points toward a structurally larger trade gap. The gold reversal is the swing factor in May, but a firmer dollar, the capital spending wave and higher memory chip prices are all working in the same direction.

For background, the U.S. advance goods trade balance is a monthly report published by the Census Bureau as part of its Advance Economic Indicators Report, released roughly a week ahead of the comprehensive FT-900 international trade figures. It captures trade in goods only, measured on a Census basis by principal end-use category, giving markets an early read on exports, imports, and the goods deficit for the reference month. Because goods flows account for most of the month-to-month volatility in the broader trade balance, the advance release is closely tracked as an input to GDP nowcasting, which was downgraded yesterday for Q2.

This article was written by Adam Button at investinglive.com.