The U.S. goods trade deficit decreased dramatically in June to its smallest level since March 2024 because domestic demand weakened. The trade deficit decreased by 10.8% to reach $86 billion which exceeded the market predictions for a trade deficit increase.
The import value decreased by $11.5 billion to $264.2 billion which represents the lowest level since March 2024. The decrease in consumer goods imports led the decline by 12.4% while industrial supplies and motor vehicles experienced similar decreases. Capital goods increased by 0.6% as the only category that rose during this period.
The export figures decreased by 0.6% to reach $178.2 billion because industrial supplies experienced an 8.1% decline. The export sector showed strong growth in capital goods and food products.
The unexpected reduction in trade deficit will enhance GDP estimates for the second quarter by offsetting some of the first quarter’s negative impact from businesses importing goods before tariff increases. The inventory buildup caused a significant reduction of 4.6 percentage points in GDP growth.
The economic experts predict that trade will drive the upcoming growth period. The government plans to publish its Q2 GDP advance estimate on Wednesday with analysts predicting a 2.4% annualized growth rate following Q1’s 0.5% decline.
The June wholesale inventory data indicated that inventory reductions will reduce the trade impact to some extent.
