When adjusted for inflation, the deficit increased to US$61.1 billion from US$57.5 billion in April.
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There was a rebound in Canada’s trade surplus with the United States to C$2.8bn from C$1.3bn as exports rose 3.6% and imports declined 1.1%.
Economists polled by Reuters had forecast the trade deficit rising to US$40.0 billion in May. May exports were down $0.3 billion from April, and May imports were up $3.4 billion. In a recent trade speech, Trump said he would exit from the North American Free Trade Agreement with Canada and Mexico if it was not renegotiated, kill the pending Trans-Pacific Partnership trade agreement and take a more aggressive approach to China’s trade practices, which he said were costing American jobs.
The agency says preliminary evidence indicates Canadian refinery activity slowed in May, freeing up crude oil for export, while the remaining shortfall was largely met by a drawdown of Alberta inventories of crude oil.
US export sales this year have been hurt by a strong dollar, which makes American products more expensive in overseas markets.
Overall, global trade has been subdued so far this year, reflecting muted domestic demand and anemic growth in the U.S.’s trade partners.
Several economists said that left the trade outlook less rosy for the second half of the year, and trade would likely drag slightly on growth.
Still, the decidedly lackluster export totals don’t bode particularly well for export-heavy industries like domestic manufacturing.
Exports of goods decreased $0.2 billion and exports of services decreased $0.1 billion. Oil prices rose $4.71 a barrel during the month, according to the Commerce Department, the biggest advance in five years.
The result from April was also revised to show a historic trade deficit of $3.32 billion compared with an initial estimate of a $2.94 billion deficit.
“The re-acceleration in imports is in line with a firming in consumer spending in the second quarter”, said Gregory Daco, head of US macroeconomics at Oxford Economics Ltd.in NY.
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May’s petroleum deficit fell to $2.9 billion, the lowest since February 1999, as the US continued to pump oil, reducing its reliance on foreign supplies.
