(C) Common Dreams
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US Trade Deficit Surges Despite Donald Trump's Tariffs [1]
['Peter Aitken', 'Newsweek Contributors', 'Alia Brahimi']
Date: 2025-06-26 11:07:07-04:00
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources.
Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content.
The U.S. trade gap increased in May by about 11 percent as exports decreased and imports remained relatively unchanged, the Commerce Department's Census Bureau reported on Thursday.
A White House spokesperson told Newsweek of the numbers that "snapshots of data miss the bigger picture" when it comes to the administration's economic policies and their effects.
Why It Matters
President Donald Trump has leaned on tariffs as the chief mechanism to address the trade deficit for the U.S. He has long said he thinks the U.S. is being taken advantage of by its trading partners.
The monthly snapshot of the U.S. trade deficit can offer insights into how White House policies are affecting the nation's economy and the larger glo
The deficit continued to widen ahead of Trump's "Liberation Day" slate of tariffs, which introduced reciprocal tariffs against dozens of U.S. trading partners. Those tariffs ranged from 10 percent to as high as 50 percent (which was applied to Lesotho).
Trump ultimately walked back most of those tariffs and maintained instead a universal 10 percent rate, with additional levies in specific cases, such as against China or against steel and aluminum imports—the effects of which are still playing out in the markets.
Shipping containers are stacked on container ships at the Port of Los Angeles on June 25, 2025, in Los Angeles. Shipping containers are stacked on container ships at the Port of Los Angeles on June 25, 2025, in Los Angeles. Mario Tama/Getty Images
What To Know
The Census Bureau reported a gap of around $96.6 billion in May, up 11.1 percent compared to the $87 billion reported in April. Exports for May dropped to $179.2 billion, dropping about 5 percent (or $9.7 billion) from April, while imports were about $0.1 billion less at around $275.8 billion.
This accompanied offsetting changes in wholesale and retail inventories, which saw the former decrease by .3 percent while the latter increased at the same rate. In real dollars, that translated to end-of-month Advanced Wholesale Inventories of $905.4 billion and Advanced Retail inventories of around $806.6 billion. Both were up compared to the same month one year earlier.
One theory is that imports increased as businesses tried to pull in more goods before the tariffs took effect.
Reuters reported that the Atlanta Federal Reserve has forecast Gross Domestic Product (GDP) will accelerate at a rate of 3.4 percent this quarter, though some experts have warned against translating this as a sign of economic strength.
What People Are Saying
White House Spokesperson Kush Desai told Newsweek in an emailed statement: "Snapshots of data miss the bigger picture: countries around the world are lining up to negotiate new trade deals with the Administration; industry leaders are pouring trillions in new investments into the United States; and the American people have now seen four consecutive expectation-beating jobs and inflation reports. The historic UK trade agreement—which opened up billions of dollars' worth of new export opportunities—is the first of many custom-made deals to come that will level the playing field for American industries and workers."
Peter Schiff, chief economist and global strategist for Europac, wrote on X: "Tariffs are not working. The U.S. trade deficit in goods surged to $96.6 billion in May, up 11% from April and 6.5% above expectations. Most problematic was the 5.2% decline in exports. Trump's goal to reduce trade deficits while expanding markets for U.S. exports has backfired."
The D.C.-based think tank Tax Foundation wrote on X: "Rather than reflecting the practices of foreign nations, the trade deficit primarily represents our decisions about how much to save (or spend) vs invest. Year after year, our trade deficit is matched by an inflow of foreign investment."
Brad Setser, an economist at the New York City-based Council on Foreign Relations, wrote on X: "I am not yet seeing a significant tariff impact on trade in capital goods -- and I do think the ongoing rise in the US deficit here is a problem (capital goods are a sector where the US should be competitive)"
What Happens Next
A number of economic indicators lag in revealing true impact and current factors could be indicative of trends and not direct results of policies. Those impacts will likely continue to shift in the coming months.
Update 6/26/25, 2:25 p.m. ET: This article has been updated with additional information.
Update 6/26/25, 12:18 p.m. ET: This article has been updated with additional information.
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[1] Url:
https://www.newsweek.com/us-trade-deficit-surges-donald-trump-tariffs-2091131
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