U.S. Monthly Trade Deficit 2nd Largest Since ‘Liberation Day'

The U.S. trade deficit in May surged to its highest level since March last year, reaching $103.65 billion, a potentially troubling sign for President Trump who has escalated tariff threats against several nations. This increase follows two months of rising deficits after a low first quarter. The deficit widened due to a significant drop in exports, particularly gold and computer components, which had seen strong performance in 2025 amid market volatility. Concurrently, imports soared, driven by substantial increases in computer parts and digital storage devices, largely attributed to the booming AI industry's demand for server infrastructure. Rising oil imports, linked to the war with Iran, also contributed. Despite years of tariff policies, the U.S. trade deficit continues its record-setting trend, frequently exceeding $1 trillion annually.

The $103.65 billion U.S. trade deficit in May was the second-highest since March of last year, the second month in a row with an increase. The deficit surged last March as companies the world over front-loaded shipments to avoid President Trump’s April 2 “Liberation Day” tariffs, since declared illegal by the Supreme Court. The only other month higher than the current figure was the $117.13 billion total last July.

The May increase is potentially troubling to a president who, like many of his predecessors, does not like trade deficits. The difference is that Trump has raised or attempted to raise tariffs to a rate not seen since the Great Depression, though not all have survived legal challenges. Within the last couple of weeks, he has threatened cutting off all trade with Spain , 50% tariffs on Canada , 25% tariffs on Brazil, 100% tariffs on generic drugs where the manufacturer is not investing in the United States, and threatening to roll out a section of the 1930 Smoot-Hawley Trade Act that has never been used. (The United States has a trade surplus with Brazil.) Most have “carve outs,” which would lessen any impact, or will soon be abandoned, if past pronouncements provide any guidance.

The May increase to $103.65 billion comes on top of a monthly increase in April to $82.46 billion, after three months of relatively low trade deficits. The February deficit was $58.42 billion. In fact, through the first quarter, the U.S. trade deficit was the lowest it had been since the first quarter of 2020 . After two months of increasing deficits, it remains down on a year-to-date basis, but only lower than the total through the first quarter of 2021.

U.S. exports, which are up 15.09% on a year-to-date basis, fell 4.49% in the month of May when compared to April and 5.96% when compared to March, according to my analysis of the latest U.S. Census Bureau data. Meanwhile, U.S. imports, which are down 4.08% year-to-date, increased in May when compared to April to the highest level since March of 2025 – the month prior to the Liberation Day tariffs were announced – up 3.79% when compared to one month ago and slightly less, 3.17%, when compared to March, two months ago.