Import Decline Narrows U.S. Trade Deficit Amid AI Spending Surge

The U.S. goods trade deficit narrowed in June due to a decrease in imports, but not enough to prevent trade from impacting economic growth negatively for the second consecutive quarter. The deficit fell to $101.5 billion, with imports decreasing as AI-related spending remained high.

The U.S. trade deficit for goods saw a narrowing in June as imports shrank, though this wasn't enough to prevent trade from detracting from economic growth for a second consecutive quarter. According to the Census Bureau of the Commerce Department, the trade gap contracted by 4.2% to $101.5 billion, slightly above economists' expectations of $100.0 billion.

Goods imports fell by $8.2 billion to $306.2 billion despite remaining high, partly driven by a surge in artificial intelligence spending that relies heavily on imports. Meanwhile, exports of goods declined by $3.8 billion to $204.7 billion. The government is poised to release its preliminary estimate of second-quarter GDP growth on Thursday.

Economists, as surveyed by Reuters, project a 2.1% annualized growth rate for the economy last quarter, matching the first quarter's pace. The decline in GDP is partially attributed to consecutive quarters of trade subtraction. However, business spending on equipment, notably for AI investments, likely served as a significant growth driver last quarter.