The U.S. trade deficit in goods narrowed to the lowest level in nearly two years in June as imports fell sharply, cementing economists’ expectations that trade likely accounted for much of an anticipated rebound in economic growth in the second quarter.
While the unexpected contraction reported by the Commerce Department on Tuesday could prompt economists to upgrade their gross domestic product estimates for last quarter, the steep decline in imports flagged slowing domestic demand.
Imports surged in the first quarter as businesses rushed to beat higher prices from President Donald Trump’s sweeping tariffs on foreign merchandise, contributing to the first decline in GDP in three years. The Trump administration has announced a number of trade deals which economists said could help to ease uncertainty.
“This lends upside risk for our (GDP) forecast,” said Matthew Martin, a senior U.S. economist at Oxford Economics. “As trade policy uncertainty eases, imports and exports may begin to find their troughs in the second half of the year and become less volatile.”
The goods trade gap narrowed 10.8% to $86.0 billion last month, the lowest level since September 2023, the Commerce Department’s Census Bureau said. Economists polled by Reuters had forecast the goods trade deficit would rise to $98.20 billion.
Imports of goods decreased $11.5 billion, or 4.2%, to $264.2 billion, the lowest level since March 2024. The decline was led by a 12.4% plunge in consumer goods imports.
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Author: Dillon B
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