US trade deficit narrows sharply in April; imports post record drop

The U.S. trade deficit narrowed sharply in April, with imports decreasing by the most on record as the front-running of goods ahead of tariffs ebbed, which could provide a lift to economic growth this quarter.

The trade gap contracted by a record 55.5% to $61.6 billion, the lowest level since September 2023, the Commerce Department's Bureau of Economic Analysis said on Thursday. Data for March was revised to show the trade deficit having widened to an all-time high of $138.3 billion rather than the previously reported $140.5 billion.

Economists polled by Reuters forecast the deficit narrowing to $70.0 billion. The goods trade deficit eased by a record 46.2% to $87.4 billion, the lowest level since October 2023.

A rush to beat import duties helped to widen the trade deficit in the first quarter, which accounted for a large part of the 0.2% annualized rate of decline in gross domestic product last quarter. The contraction in the deficit, at face value, suggests that trade could significantly add to GDP this quarter, but much would depend on the state of inventories.

Imports decreased by a record 16.3% to $351.0 billion in April. Goods imports slumped by a record 19.9% to $277.9 billion. They were held down by a $33.0 billion decline in imports of consumer goods, mostly pharmaceutical preparations from Ireland. Imports of cellphones and other household goods fell $3.5 billion.

Imports of industrial supplies and materials declined $23.3 billion, reflecting decreases in finished metal shapes and other precious metals.

Motor vehicle, parts and engines imports fell $8.3 billion with passenger cars accounting for much of the decline. The front-loading of imports is probably not over. Higher duties for most countries have been postponed until July, while those for Chinese goods have been delayed until mid-August.

President Donald Trump's administration had given U.S. trade partners until Wednesday to make their "best offers" to avoid other punishing import levies from taking effect in early July.

Imports from Canada were the lowest since May 2021, while those from China were the lowest since March 2020. But imports from Vietnam and Taiwan were the highest on record. 

Exports rose 3.0% to $289.4 billion, an all-time high. Goods exports increased 3.4% to a record $190.5 billion. They were boosted by a $10.4 billion jump in industrial supplies and materials, mostly finished metal shapes, nonmonetary gold and crude oil.

Capital goods exports advanced $1.0 billion, lifted by computers. But exports of motor vehicles, parts and engines fell $3.3 billion, held down by passenger cars as well as trucks, buses and special purpose vehicles.

Exports of services increased $2.1 billion to $98.9 billion, lifted by travel, despite reports of decreased tourist visits because of the trade tensions and an immigration crackdown.

The United States had record goods trade surpluses with Hong Kong, the United Kingdom and Switzerland. But it had record deficits with Vietnam, Taiwan and Thailand, while the gap with Canada was the smallest since April 2021.