Trade deficit hits highest level in six months

The increase in imports was led by an increase of petroleum products. Overall, the U.S. petroleum deficit accounts for roughly half of the total trade deficit.

“Travel exports continued to buck the trend in May,” said David Huether, senior vice president of research and economics at the U.S. Travel Association. 

“While overall U.S. exports fell in May, the third monthly decline so far this year, travel exports continue to be a source of durable strength for the U.S. economy, rising in May for the fourth time in the past five months,” he said. 

With trade talks scheduled to begin next week between the United States and the 28-nation European Union, exports to the region increased 6.4 percent after months of similar drops. 

The U.S. and the EU are the world’s largest trading partners, and they would create a $5 trillion trading zone if they complete a deal within the next couple of years. 

Still, the deficit is forecast to wind up around $501.2 billion, more than 6 percent below last year’s $534.7 billion.

Meanwhile, the deficit with China jumped by more than 15 percent to $27.9 billion in May, bringing renewed calls for U.S. officials to address currency manipulation issues during high-level talks scheduled for next week in Washington. 

“The administration’s approach on economic balance with China is not working,” said Scott Paul, president of the Alliance for American Manufacturing. 

“The administration and Congress must crack down on currency manipulation, China’s government subsidies to industry, and vigorously pursue trade cases against China’s market distorting practices.”

There is growing pressure from a broad coalition of lawmakers to pass China currency legislation that would punish Beijing for not allowing the yuan to appreciate at a faster rate. 

Manufacturers argue that the undervalued currency gives China an international trade advantage and is costs U.S. jobs. 

Still, Paul said he doesn’t expect the US.-China Strategic and Economic Dialogue to produce any results and suggested the White House pursue a long-term goal of cutting the deficit in half in the next three years. 

The manufacturing sector has been held back by slow global growth, though factory activity has been showing signs of life in the past couple of months. 

Still, hiring has slowed in the sector, and manufacturing experts have pressed for greater fiscal certainty out of Washington to bolster future growth.