US trade deficit expands as imports hit record high

By the Editorial Team · Wednesday, July 8, 2026

The U.S. trade deficit expanded to $77.6 billion in May due to a surge in imports of pharmaceuticals, technology, and vehicle equipment alongside a decline in exports of goods like gold and natural gas. This widening gap highlights ongoing high domestic demand and sets the stage for possible reinstatement of tariffs as the government plans new trade investigations following the expiration of a temporary duty.

The United States trade deficit widened significantly in May, reaching $77.6 billion as imports surged to record levels while exports declined. According to data released by the Commerce Department, imports increased by 3.3% from April to $395.3 billion, driven by higher purchases of foreign pharmaceuticals, cellphones, cars, and equipment used in new data centers. Conversely, exports fell 3.2% to $317.7 billion, with decreases notable in shipments of gold, natural gas, computers, and pharmaceuticals.

Despite the drop in goods exports, service exports showed resilience, supported by increased revenue from foreign visitors traveling to the U.S. Both exports and imports of services reached new highs in May, as did U.S. petroleum exports. The rise in goods imports and sustained service trade activity contributed to a monthly trade deficit that was more than 42% higher than the previous month.

Since President Donald Trump’s return to office at the start of his second term, the monthly goods trade deficit has averaged around $96 billion, roughly 5% lower than the average in the 16 months before his presidency. The Trump administration’s extensive use of tariffs on foreign goods has led to fluctuating import, export, and deficit figures throughout this period. While some imports have declined due to tariffs, ongoing strong domestic demand for artificial intelligence-related technologies, foreign medicines, and other products not produced domestically has maintained elevated import levels.

Geopolitical developments have also influenced trade patterns. The conflict in Iran and the resulting closure of the Strait of Hormuz disrupted supply chains, affecting commodities such as oil, fertilizer, packaging materials, and helium. In April, this disruption contributed to a decline in the monthly trade deficit as exports of U.S. oil and petroleum products hit a new monthly high.

Looking ahead, U.S. importers are preparing for significant changes in trade policy. Following a February Supreme Court ruling that invalidated the Trump administration’s previous global tariffs, the government implemented a temporary flat 10% duty on all imports. This measure is set to expire soon, and the administration is developing new trade probes under Section 301 of the Trade Act. These investigations are expected to target countries’ restrictions on forced labor imports and their industrial policies aimed at unfairly supporting domestic manufacturers, potentially resulting in a reinstatement of tariffs to pre-ruling levels.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.