The U.S. trade deficit widened to a record high in March as businesses doubled down on imports ahead of President Donald Trump’s sweeping tariffs, which dragged the GDP into negative territory in the first quarter for the first time in three years.
The trade gap rose 14 percent, or $17.3 billion, to a record $140.5 billion, the Commerce Department’s Bureau of Economic Analysis (BEA) said on Tuesday.
Imports from China fall to 5-year low
The Commerce Department’s report also revealed on Tuesday that the U.S. imported a record amount of goods from 10 countries, including Mexico and Vietnam. However, imports from China fell to their lowest in five years and are expected to continue declining following Trump’s decision to raise levies on Chinese goods to a staggering 145 percent.
The seasonally adjusted U.S. goods trade deficit with China declined to $24.8 billion from $26.6 billion in February. The trade deficit with Canada also declined to $4.9 billion from $7.4 billion in February. Meanwhile, the trade gap with Mexico was little changed and the surplus with the United Kingdom narrowed.
Imports surge to $419.0 billion in March
Amid the surge in the U.S. trade deficit, imports rose 4.4 percent to an all-time high of $419.0 billion in March. Goods imports also soared 5.4 percent to a record $346.8 billion due to a $22.5 billion increase in consumer goods, mostly pharmaceutical preparations.
The report also revealed that capital goods imports increased $3.7 billion to a record high, while imports of automotive vehicles, parts and engines increased $2.6 billion.
However, imports of industrial supplies declined $10.7 billion amid falls in finished metal shapes and nonmonetary gold, which had accounted for the surge in the prior two months. Crude oil imports also fell by $1.2 billion.
Read: UK and India sign major trade deal to boost bilateral trade by $34 billion
Exports rise to record high
On the other hand, U.S. exports increased by 0.2 percent to $278.5 billion, also a record high. Exports of goods increased 0.7 percent to $183.2 billion, the highest since July 2022, mainly due to industrial supplies and materials.
In addition, automotive vehicles, parts and engines exports increased by $1.2 billion. However, exports of capital goods decreased $1.5 billion due to a $1.8 billion decline in shipments of civilian aircraft. The U.S. goods trade deficit rose 11.2 percent to a record $163.5 billion in March.
The government reported last week that the U.S. trade deficit cut a record 4.83 percentage points from GDP last quarter, resulting in the economy contracting at a 0.3 percent annualized rate, the first decline since the first quarter of 2022.
