Australia’s trade surplus in goods narrowed to AUD 2.24 billion in May 2025, down sharply from a downwardly revised AUD 4.86 billion in April and well below market expectations of AUD 5.0 billion. This marked the smallest trade surplus since August 2020, as exports declined while imports increased. Exports fell by 2.7% month-over-month to a three-month low of AUD 42.40 billion, following a downwardly revised 1.7% drop in April. The decline was driven in part by a 5.5% fall in shipments to the United States, impacted by tariffs imposed under the Trump administration. In contrast, exports to China - Australia’s top trading partner - rose by 1.9%. By commodity category, exports declined for rural goods (-3.5%), non-rural goods (-2.4%), and non-monetary gold (-3.4%). Meanwhile, imports rose by 3.8% to a record high of AUD 40.16 billion, accelerating from an upwardly revised 1.6% increase in April, mainly driven by stronger demand for capital goods.