The U.S. trade deficit with Asia surges, companies rush to beat Trump's tariff deadline again
The trade deficit between the United States and Asia has widened as importers stockpiled goods ahead of the tariff deadline set by Trump. Exports from Vietnam, Taiwan, and Thailand to the U.S. reached record highs in May, increasing by 35% and nearly 90% year-on-year, respectively. The U.S. trade deficit in May is expected to reach $91 billion, potentially bringing the deficit to $643 billion by 2025. If Trump imposes high tariffs in July as threatened, the surge in exports could reverse, impacting regional economic growth. The Asia-Pacific Economic Cooperation has lowered its GDP growth forecast to 2.6%
According to Zhitong Finance APP, as importers rush to stock up before the "reciprocal" tariff deadline set by U.S. President Trump, the trade deficit between the U.S. and Asia is widening. Data released in recent weeks shows that exports to the U.S. from Vietnam, Taiwan, and Thailand hit record highs in May.
Data released on Monday indicated that South Korea's exports to the U.S. last month were close to record levels, and there seems to be another increase in early June.
These record numbers break the normal historical pattern, where trade tends to be stronger in the second half of the year as Asian suppliers rush to ship goods to the U.S. before the Christmas holiday. The threat of new tariffs starting in early July is forcing businesses to load goods onto ships and send them to the U.S. as quickly as possible.
Exports from Asia to the U.S. surged before tariffs
In May, exports from Vietnam and Thailand to the U.S. both increased by 35% year-on-year, while exports from Taiwan soared nearly 90%. These record growth figures may begin to show when the U.S. releases its May data this week, potentially complicating negotiations between Trump and various Asian economies regarding the tariff levels to be set by the U.S.
As businesses try to cope with the sudden changes in tariffs and trade policies from Washington, the U.S. trade deficit has widened significantly this year. While a substantial increase in pharmaceutical imports from Europe is one reason for the deficit, Asian countries are the largest single factor contributing to the deficit.
It is estimated that the U.S. trade deficit in May was $91 billion, bringing the deficit for 2025 to nearly $643 billion so far—far exceeding the record levels for the same period in previous years during the pandemic.
The U.S. trade deficit hits a new high this year
If Trump imposes historically high tariffs on Asian countries in early July as he has threatened, the surge in exports could quickly reverse, undermining economic growth across the region.
Last month, the Asia-Pacific Economic Cooperation (APEC) significantly lowered its GDP growth forecast for this year due to trade tensions, predicting that the economies of its 21 members will grow by 2.6%, down from the 3.3% forecast in March.
China's direct exports to the U.S. have significantly decreased
Policy fluctuations are already affecting trade with China, as exports to the U.S. from China fell in May, despite a tariff truce reached in Geneva in mid-month.
However, this may not be the full picture: even with the tariff reductions agreed upon in that deal, U.S. import taxes remain high, prompting some exporters to route products through third economies, a process known as "origin laundering." Chinese companies are also working hard to legally shift exports to other markets and sell more products domestically.
If other Asian countries cannot reach an agreement with the United States and avoid significant tariff increases, they may soon see their economic growth impacted
