US trade gap widens to largest in six months as exports slump

The US trade deficit widened in April to the largest in six months as exports declined by the most since the start of the pandemic and imports picked up.

The shortfall in goods and services trade grew by $14 billion, or 23% from a month earlier, to $74.6 billion, Commerce Department data showed Wednesday. The figures aren’t adjusted for inflation. The median estimate in a Bloomberg survey of economists called for a widening to $75.8 billion.

The value of goods and services exports fell 3.6%, the most since April 2020, to $249 billion, while imports rose 1.5% to $323.6 billion. The drop in outbound shipments was relatively broad and included declines in industrial supplies. Exports of capital goods and consumer merchandise also decreased.

Imports of motor vehicles and parts, industrial supplies, cell phones and other household goods increased. 

The wider deficit suggests trade will subtract from second-quarter gross domestic product. While that reflects greater dependence on foreign producers, the increase in imports also illustrates resilient demand for consumer goods.

Separate data have pointed to robust household spending at the start of the second quarter, underpinned by a solid job market. Whether that momentum can be sustained, however, is unclear.

On an inflation-adjusted basis, the April merchandise trade deficit increased to $95.8 billion, the largest gap since June 2022.

GDP Impact

In light of the latest figures, net exports will subtract an estimated 2.5 percentage points from second-quarter gross domestic product, Paul Ashworth, chief North America economist at Capital Economics, said in a note.

“Even allowing for some offsetting neutral or slightly positive contribution from inventories, that means second-quarter GDP growth will be somewhere between zero and 1%,” Ashworth said.

The latest release also incorporates revisions to historical data. Statistics on merchandise trade were revised back to 2018, while figures on services were adjusted back to 2017. The reference year for the inflation-adjusted series was also updated to 2017 from 2012.

Digging Deeper

• Travel exports — or spending by visitors to the US — increased to $14.2 billion
• Travel imports, a measure of Americans traveling abroad, decreased to $12.1 billion, a three-month low
• The US merchandise-trade deficit with China widened to a seasonally adjusted $24.2 billion from $22.6 billion