U.S. Trade Deficit Narrows in April, Supported by Record Petroleum Exports The U.S. trade deficit narrowed in April as exports of petroleum products and capital goods jumped to record highs, a trend that if sustained, will put trade on course to contribute to economic growth in the second quarter. The report from the Commerce Department on Tuesday suggested no major impact on trade flows from the U.S.-backed war with Iran, which has disrupted shipping in the Strait of Hormuz. The U.S. trade deficit narrowed in April as exports of petroleum products and capital goods jumped to record highs, a trend that if sustained, will put trade on course to contribute to economic growth in the second quarter. The report from the Commerce Department on Tuesday suggested no major impact on trade flows from the U.S.-backed war with Iran, which has disrupted shipping in the Strait of Hormuz. Tariffs also appeared to be doing little to curb imports. Businesses ramping up spending on artificial intelligence helped to lift capital goods imports to a record high in April. Soaring oil exports are helping to narrow the U.S. trade gap, with tariffs playing a more minor role in slowing imports.The trade gap contracted 1.2% to $55.9 billion, with exports increasing 2.6% to a record high of $327.1 billion and goods exports surging 4.1% to a record high of $221.3 billion. Petroleum exports increased to a record high of $36.7 billion from $27.6 billion in March, driven by higher volumes and oil prices tied to the Middle East conflict. The U.S. is a net oil exporter.The increase in petroleum products, including crude oil, pushed exports of industrial supplies and materials to a record high of $89.0 billion. The nation's petroleum trade surplus swelled to a record high of $17.7 billion from $9.4 billion in March. Exports of capital goods increased $4.0 billion to a record high of $70.3 billion amid strong gains in computers and civilian aircraft. Consumer goods exports increased $1.7 billion.The increase in overall exports outpaced imports, which rose 2.0% to $383.0 billion in April. Goods imports advanced 2.1% to $304.9 billion. The overall goods trade deficit contracted 2.8% to $83.7 billion. When adjusted for inflation, the goods trade gap narrowed $1.5 billion, or 1.8%, to $84.3 billion.Trade has been a drag on gross domestic product for two straight quarters. The latest trade data bode well for GDP when excluding trade in gold. The U.S. goods trade deficit with China decreased $2.6 billion to $12.0 billion, with both exports and imports declining. The U.S. had goods trade deficits with Taiwan, Vietnam, Mexico, the European Union, Canada, and South Korea among other nations.President Donald Trump's administration has defended its protectionist trade policy as necessary to address these imbalances. The trade surplus with the United Kingdom dropped $3.8 billion to $2.6 billion in April, reflecting declines in both exports and imports. Exports of services fell $0.4 billion to $105.8 billion in April, pulled down by weakness in travel, transport and maintenance and repair services. Exports of other business services, however, increased.Imports of services shot up $1.3 billion to $78.0 billion amid gains in transport, travel and insurance services. The housing market is showing tentative signs of stabilizing, though rising mortgage rates because of the war and still-tight inventory continue to cast a shadow over the sector. Existing home sales jumped 3.2% in May to a seasonally adjusted annual rate of 4.170 million units, the National Association of Realtors said in a separate report.Home resales, which are counted at the closing of a contract, increased 3.2% on a year-over-year basis in May. The war is fanning inflation, driving up the U.S. Treasury yields that mortgages track. The average rate on the popular 30-year fixed-rate mortgage has increased by about 50 basis points since the war started