US Trade Deficit Widens as Imports Surge Amid AI Investment Boom

The US trade deficit widened sharply in May as AI-driven capital goods imports surged, while weaker exports, slowing job growth and persistent trade uncertainty clouded economic prospects.

US Trade Deficit Widens Sharply

The United States recorded a significantly wider trade deficit in May as strong demand for capital goods linked to artificial intelligence investment pushed imports to their highest level in months, adding pressure to the country’s economic outlook.

According to the latest trade data, the US trade deficit expanded to USD77.6 billion in May from a revised USD54.6 billion in April. Although slightly narrower than market expectations of USD78.5 billion, the figure marked the largest deficit since March and highlighted the continued drag from external trade on economic growth.

US exports fell 3.2% month-on-month to USD317.7 billion after reaching a record high in April. The decline was mainly attributed to weaker goods exports, particularly industrial supplies and materials, including lower shipments of nonmonetary gold, precious metals and natural gas.

Meanwhile, imports climbed 3.3% to USD395.3 billion, supported by a sharp increase in goods imports. Consumer goods, including pharmaceuticals, mobile phones and household products, contributed strongly, while imports of capital goods reached a record high as businesses continued investing in AI-related technologies.

Separately, labour market indicators pointed to moderating employment growth. Data from the ADP Research Institute showed private employers added an average of 21,000 jobs per week over the four weeks ending June 20, below expectations and marking a second consecutive period of slowing job creation.

Looking ahead, uncertainty surrounding US trade policy is expected to remain elevated. The Trump administration has decided not to renew the United States-Mexico-Canada Agreement under its current framework, opting instead for annual trade reviews with Canada and Mexico while pursuing stricter tariff measures.

Analysts believe continued trade policy uncertainty and persistent tariff negotiations could weigh on exports and business confidence. Combined with slowing labour market momentum, the widening trade deficit suggests external trade may continue to restrain US economic growth in the coming months.