May US trade deficit surges 8.4% to $55.5 billion

The US trade deficit increased by 8.4%, according to the US Commerce Department. The trade deficit was higher than April’s upwardly revised $50.2 billion. The US trade deficit had the highest growth in imports since 2015.

US trade deficit:key figures

US trade deficit grows with rise in imports before US-China tariff conflict

May imports increased by 4% to $217 billion because of an increase in importing crude oil, cell phones, cars, and computers. The US trade gap with China grew to $30.2 billion. Imports from China likely grew as businesses placed orders from the Asian nation right before US President, Donald Trump, imposed additional tariffs on Chinese goods. Imports of consumer goods increased by $1.4 billion. Auto and car part imports grew to a record high of $2.3 billion.

Exports rose 2.8% to $140.8 billion. The US exported more soybeans, vehicles, and passenger planes than it imported. Aircraft exports rose by $0.5 billion, despite Boeing grounding its MAX 737 plane after two fatal plane crashes.

What do financial experts say about the May US trade deficit?

Citi Research Economists predict that US Q2 gross domestic product ( GDP) will drop because of the US trade deficit.

‘Although slightly wider than expected, we have been already penciling in a slight drag on [the second quarter] real GDP from net exports,’ said the economists.

Andrew Hunter, senior US economist at Capital Economics, also believes that US Q2 GDP will decline as the US-China trade imbalance remains.

‘We [Capital Economics] still think it is slightly more likely than not that the trade dispute with China will ultimately escalate further. Trade is likely to remain a modest drag on growth over the second half of this year, which we expect to compound a sharp slowdown in domestic demand growth,’ said Hunter.