The wave of tariff hoarding retreats! U.S. goods imports plummeted in June, and the deficit narrowed more than expected, which may boost second-quarter GDP
The U.S. trade deficit in goods narrowed more than expected in June, falling 10.8% to $86 billion, reflecting a decrease in the buying spree before the tariff policy took effect, with a general decline in import volumes. Imports in June fell 4.2% to $264.2 billion, with imports of consumer goods and industrial supplies hitting new lows. Economists expect GDP growth in the second quarter to improve, with an increased contribution from net exports. Despite the uncertainty brought by the tariff policy, the Trump administration still views it as a core strategy to stimulate the economy. Complete trade data for June will be released on August 5
According to the Zhitong Finance APP, the U.S. trade deficit in goods for June narrowed more than expected, reflecting a general decline in imports as the momentum of stockpiling goods before the implementation of the Trump administration's tariff policy weakened. Data released by the U.S. Department of Commerce on Tuesday showed that the unadjusted trade deficit in goods narrowed by 10.8% from the previous month to $86 billion, a figure lower than all forecasts from economists surveyed.
Specifically, imports in June fell by 4.2% to $264.2 billion, with consumer goods imports dropping to the lowest level since September 2020, industrial goods imports hitting a new low since 2021, and motor vehicle imports also declining. During the same period, U.S. goods exports decreased by 0.6%.
These data will provide a basis for economists to adjust their estimates of the net export contribution to GDP growth in the second quarter, with the trade imbalance that dragged down GDP growth at the beginning of the year expected to improve significantly in the second quarter.
In the first quarter of this year, U.S. companies significantly increased imports to beat the implementation of the Trump administration's tariff policy, resulting in a 4.61 percentage point reduction in the share of net exports in GDP, directly dragging the economy into a quarter-on-quarter annualized contraction of 0.5%. Before the latest trade data was released, the Atlanta Fed's GDPNow model predicted that the U.S. economy would grow by 2.4% from April to June, with net exports expected to contribute 3.31 percentage points.
In addition to the goods trade data, the latest economic indicator estimate report shows that retail inventories grew by 0.3% in June, marking the largest increase since September of last year, primarily driven by a surge in automobile dealer inventories; wholesale inventories increased by 0.2%.
The frequently adjusted tariff policies of the Trump administration continue to create uncertainty for the manufacturing sector. Although some trading partners have reached agreements, there are still countries that need to reach consensus with the U.S. before the Friday deadline, or they will face the risk of significant tariff increases.
The Trump administration views tariffs as a core strategy to stimulate domestic production, promote export growth, reduce trade deficits, increase fiscal revenue, and strengthen national security. It is worth mentioning that more complete trade data for June (including the balance of services accounts) will be officially released on August 5
