Tariffs have not stemmed U.S. consumer demand for foreign goods.
The Commerce Department reported Wednesday that the U.S. international trade deficit rose to $55.5 billion in May, up 8.4% from April’s $51.2 billion and its highest level in five months. The department also revised April’s deficit upwards from its initially reported level of $50.8 billion.
Overall, exports in May totaled $210.6 billion, up $4.2 billion from the previous month. However, the gain was outpaced by a faster rise in imports, which reached $266.2 billion in May, up $8.5 billion from the previous month. Compared with May of last year, exports were down $1.2 billion while imports had risen $5.1 billion.
The increase in exports was driven by a $1.4 billion rise in capital goods, mainly aircraft sand telecommunications products. Imports rose due to higher demand for vehicles and parts, industrial supplies, and oil.
The goods trade deficit with China was $30.2 billion in May, an increase of 12.2% over the previous month despite the continued presence of the Trump administration’s 25% tariffs on $250 billion worth of Chinese goods.
There was little progress on other trade war fronts as well. The trade deficit with Canada doubled from the previous month to $3.6 billion in May, up from $1.8 billion. The deficit with Mexico was $9.1 billion, up $1.1 billion from the previous month.
The numbers come as the White House stands at a delicate point in several trade negotiations. Following a talk with Chinese President Xi Jinping at the G20 summit in Japan, President Trump announced on Saturday that trade talks with Beijing were back on after a month and a half of no activity. No date for formal talks has been announced however. While Trump held off on adding 25% tariffs to $300 billion in Chinese goods as a goodwill gesture, he refused to lift existing tariffs. The U.S. had previously claimed that China had tried to walk back concessions it made previously in talks, which Beijing has denied.
The White House is also trying to get House Democrats to agree to bring up the U.S.-Mexico-Canada Agreement on trade, which would replace the 1993 North America Free Trade Agreement, up for a vote. House Speaker Nancy Pelosi, D-Calif., has thus far refused to schedule one, claiming the deal needs strong enforcement provisions.
