US goods trade deficit shrinks to $101.5B in June, but Q2 GDP growth still takes the hit

The US goods trade deficit narrowed to $101.5 billion in June 2026, a $4.4 billion improvement from May’s $106.5 billion figure. On the surface, that looks like progress. Dig a little deeper, though, and the quarter’s cumulative trade picture still points to a meaningful drag on Q2 GDP growth. June goods exports clocked in at $204.7 billion against $306.2 billion in imports. The gap shrank, yes, but the damage from earlier in the quarter had already been done, with May’s deficit alone jumping $23.6 billion from April. The quarter that tariffs built May’s goods deficit of $106.5 billion contributed to a total goods-and-services deficit of $77.6 billion that month. The increase from April was steep enough to signal that net exports would weigh on the quarter’s growth figures more heavily than they did in Q1. Year-to-date through May 2026, the goods-and-services deficit had actually decreased by 40.6% compared to the same period in 2025. Exports were up 11.7% while imports declined 2.1%. That annual improvement is largely a downstream effect of the Trump administration’s tariff initiatives, which have been reshaping trade flows with partners including Canada and Mexico. The administra...