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As with last month’s numbers, this morning’s U.S. trade figures need to be taken with a big grain (or boulder?) of salt due to President Trump’s on-again, off-again tariff decisions with major foreign economies like Mexico and especially China. The big takeaway, IMO: These May data show that the portion of the nation’s trade deficit most affected by trade policy decisions is still growing much more slowly this year than it did last year – even though the pace of overall U.S. economic growth looks to be just slightly weaker. And that’s clearly good news if you share my belief that humongous and ballooning trade deficits are bad news for the economy.

Specifically, I’m talking about the non-oil goods trade deficit – the shortfall which strips out oil (which is rarely dealt with by trade policymakers anywhere) and services (where liberalization remains in its infancy). 

On a monthly basis, this trade gap (which I like to call the Made in Washington trade deficit) jumped by 3.02 percent in May – the biggest such rise since last December’s 9.07 percent, when importers were “front-running” – that is, scrambling to bring in foreign product ahead of threatened and imminent tariffs. And its $70.85 billion level was the highest since December’s $78.06 billion.

But for the first five months of this year, this deficit is up just 6.76 percent – much less than the 11.14 percent increase registered between January and May last year. And although the second quarter’s economic growth figures aren’t yet in, the gross domestic product (GDP) for the first half of this year seems set to expand at a rate that’s eminently respectable compared with last year’s first half.

In addition, the May figures show that the United States continues making progress in reducing its chronic and huge goods trade deficit with China – a major Trump goal.

As with the non-oil goods deficit overall, the U.S. merchandise shortfall with China grew sequentially in May – by 12.24 percent. The increase was the biggest in percentage terms since the 20.64 percent monthly surge last May, during the tariffs front-running period.

U.S. goods exports to the People’s Republic were up fully 14.92 percent on month in May – their best such performance since February’s 18.21 percent improvement. Yet the much larger amount of goods imports from China shot up by 12.85 percent – the biggest such increase since last May’s 14.78 percent.

Interestingly, though, given the seasonal factors that shape so much trade with China, this month’s May U.S. merchandise trade deficit with China was the lowest May total since 2016 – when overall American growth was much slower.

On the manufacturing trade front, another major Trump priority, the longstanding and huge monthly deficit climbed by 6.08 percent sequentially in May – from $86.78 billion to $92.06 billion. The May level is also the highest since January’s $89.13 billion.

On month, May manufacturing exports advanced by 5.30 percent, from $92.62 billion to $97.53 billion. But the much larger amount of imports increased by 5.67 percent, from $179.41 billion to $189.59 billion.

These new figures brought the year-to-date manufacturing trade deficit up to $416.23 billion in May – 5.28 percent higher than last year’s comparable total ($395.36 billion). Manufactures exports are actually down 1.93 percent this year so far while imports are up 1.33 percent.

Overall, the combined U.S. goods and services trade deficit widened by 8.39 percent on month in May – from an upwardly revised $51.22 billion to $55.52 billion. The May level was the highest and the sequential rise were both the highest since December ($60.81 billion and 13.35 percent, respectively).

On a January-May basis, the total trade deficit has worsened by 6.38 percent – a somewhat slower rate than the previous year’s 7.70 percent.

Total exports in May increased by 2.05 percent – their biggest such increase since last May’s 2.13 percent. But this improvement followed April’s 2.37 percent sequential decline – the worst such performance since January, 2016’s 2.66 percent.

Total imports, though, soared by 3.31 percent sequentially in May – from $257.64 billion to $266.16 billion. That total is the third highest ever (after last October’s $266.82 billion and last December’s $266.47 billion – during the tariffs front-running period). The monthly increase was the biggest since March, 2015’s 6.69 percent. But it also followed s big April monthly fall-off – 2.16 percent, the greatest since January’s 2.40 percent.