- The U.S. trade deficit jumped to $105.8 billion in May, raising concerns about second-quarter economic growth.
- Peter Schiff said the wider trade deficit challenges claims that tariffs would reduce America’s trade imbalance.
- Economists warn rising imports and weaker exports could weigh on GDP despite steady consumer spending.
The U.S. goods trade deficit widened to $105.8 billion in May, far exceeding economists’ expectations, according to new Commerce Department data. The sharp increase has added to concerns that trade could slow economic growth during the second quarter, even as consumer spending and business investment remain steady.
Economist Peter Schiff pointed to the latest figures in a post on X, saying they contradict claims that President Donald Trump’s tariffs would reduce the country’s trade deficit. “The U.S. goods trade deficit soared over 28% in May, jumping to $105.8 billion, the largest since Mar. 2025,” he wrote. He added, “This flies in the face of Trump’s claim that his tariffs will help reduce America’s persistent trade deficits.”
Imports Rise While Exports Weaken
The Commerce Department said goods imports rose 3.6% to $313.4 billion in May, driven by stronger demand for automobiles and consumer products. Automotive imports increased 6.3%, while consumer goods imports climbed 5.7%. Imports of industrial supplies and food also moved higher.
Exports, however, weakened during the month. Goods exports fell 5.4% to $207.7 billion. Consumer goods exports dropped 9.2%, while industrial supplies declined 7%. Capital goods exports also fell, slipping 5% as overseas demand softened.
Several factors contributed to the wider trade gap. Many businesses increased imports to avoid possible supply disruptions during tensions in the Middle East. Also, continued investment in artificial intelligence has boosted demand for imported equipment and technology.
Related: Peter Schiff Says Bitcoin Has Lost 60% Against Gold Since 2021
Economists Warn About Growth Risks
Economists said the wider trade deficit could weigh on economic growth in the coming months. Carl Weinberg, chief economist at High Frequency Economics, said rising imports could reduce national income unless stronger services exports offset growing demand for imported equipment tied to the artificial intelligence boom.
Christopher Rupkey, chief economist at FWDBONDS, also warned that higher imports could drag on second-quarter economic growth. He said U.S. manufacturers cannot fully replace many imported goods, leaving the trade deficit as a continuing challenge for the economy.
Others also pointed to weaker growth prospects. Walter Bloomberg noted that the May trade deficit came in well above market expectations. Economist E.J. Antoni said wholesale and retail inventories only kept pace with inflation, while the larger trade gap could weigh on second-quarter GDP.
Schiff also turned his attention to financial markets. He criticized Bitcoin investment products and argued that the Federal Reserve could eventually cut interest rates if economic conditions weaken, even if inflation remains elevated.
Related: US Inflation Hits 4.1% as Energy Costs Keep Price Pressures High
Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
