By Harriet Torry

The U.S. trade deficit ballooned in May to its widest since March 2025 as the country imported more products like pharmaceuticals, vehicles and semiconductors for the artificial-intelligence boom, while American-made exports declined.

The trade gap in goods and services widened by 42.2% in May from the prior month to a seasonally adjusted $77.6 billion, the Commerce Department said Tuesday. That marked the highest level since the deficit neared $133 billion in March last year, when companies were racing to import goods ahead of President Trump's new tariff rollouts.

The deficit has been volatile during Trump's second term, with shifting tariff policies and a rebuke from the Supreme Court that limited his ability to impose broad duties on most foreign countries. On average, the deficit is still slightly smaller since he returned to office than it was in the same-size period before then.

Exports fell 3.2% in May, led by a large decline in sales of gold to overseas buyers. Big swings in international flows of the precious metal have added to volatility in trade data for months.

Imports picked up, rising 3.3% on the month, aided by strong demand for goods related to the AI build-out, including semiconductors and computer accessories. Shipments of pharmaceutical products, cellphones and vehicles from abroad also increased.

Economists said May's increase in imports and decline in exports point to trade being a drag on gross-domestic-product growth in the second quarter. The Commerce Department will release its first look at economic activity in the April-to-June period at the end of July.

First-quarter GDP grew at a 2.1% annualized rate.

Year-to-date, the trade deficit was 40.6% smaller through May than in the same period in 2025. The early months of 2025 were pumped up by efforts to front-run the Trump administration's "Liberation Day" tariffs in April that year.

Paring back America's consistent trade deficits has been a cornerstone of Trump's economic vision. That goal is largely what prompted the barrage of tariffs Trump has unveiled since returning to the White House last year.

U.S. trade policy has been thrown into fresh doubt this month, as the U.S. declined to extend its signature trade pact with Mexico and Canada. The U.S.-Mexico-Canada trade agreement is still in effect, and U.S. trade representatives will now have to meet with Mexican and Canadian officials every year for a decade to continually review the deal.

Write to Harriet Torry at harriet.torry@wsj.com

(END) Dow Jones Newswires

July 07, 2026 12:54 ET (16:54 GMT)