The US trade deficit narrowed in June as imports declined faster than exports, offering a modest improvement in the country’s trade balance even as economists warned that strong domestic demand and shifting global supply chains could limit further progress.
According to data released by the Commerce Department, Uncle Sam’s trade deficit in goods and services fell 5.6% from the previous month to USD 73.3 billion, slightly above May’s revised level and broadly in line with market expectations.
Imports fell 1.8% to USD 388 billion, driven by a 2.5% decline in goods imports to USD 309 billion. Exports also eased, slipping 0.9% to USD 314.7 billion, with goods exports falling 1.9% to USD 206.9 billion after petroleum shipments retreated from record levels reached in May. Despite the monthly decline, both imports and exports of services hit record highs in June.
The figures come as the Donald Trump administration continues to pursue an aggressive trade policy aimed at reducing the US trade deficit through higher tariffs on imported goods. Last month, Washington imposed a fresh round of duties on products from more than 80 countries after the Supreme Court struck down an earlier version of the tariff regime.
While the administration views a smaller trade deficit as evidence of stronger domestic manufacturing, economists said the underlying picture remains mixed. Average monthly trade deficits since President Donald Trump returned to office have declined by around 6% compared with the previous 17-month period, but imports remain resilient in sectors where the US relies heavily on overseas suppliers.
Demand for imported semiconductors used in artificial intelligence (AI) data centres, pharmaceuticals and other high-value products has remained strong. At the same time, businesses have continued to adjust purchasing patterns by stockpiling goods ahead of tariff changes, contributing to sharp month-to-month swings in trade flows.
Imports from China remain below pre-tariff levels, but shipments from Mexico, Vietnam and South Korea reached record highs in June, reflecting the continued diversification of global supply chains.
The broader geopolitical backdrop has also influenced trade. Disruptions caused by the conflict in Iran and the closure of the Strait of Hormuz reshaped global energy supply chains, boosting American petroleum exports while affecting shipments of fertilisers, packaging materials and helium.
Although the trade gap narrowed during June, it remained a drag on the US economy. Government data released last week showed that the widening deficit shaved a full percentage point off second-quarter economic growth, even as consumer spending and investment in AI infrastructure continued to underpin domestic demand.