The United States experienced a substantial decline in its trade deficit with global partners in April, marking the most significant drop on record. This decrease comes as businesses and consumers tapered their rush to import goods in anticipation of tariffs imposed by President Donald Trump.
The trade deficit fell to $61.6 billion, a substantial reduction of $76.7 billion from March and below the Dow Jones consensus estimate of $66.3 billion, as reported by the Commerce Department on Thursday.
This shift follows a considerable spike in imports ahead of Trump’s “Liberation Day” tariff announcement on April 2.
In a move that surpassed expectations, Trump implemented a 10% tariff across the board on U.S. imports and introduced a list of reciprocal tariffs targeting what he deemed unfair trade practices from several nations.
However, Trump later eased the reciprocal tariffs, opting for a 90-day negotiation period, and also softened the tariffs imposed specifically on China, which reciprocated as discussions progressed.
As imports dramatically declined by 16.3% to $351 billion in April, exports saw a corresponding increase of 3%.
“While ‘deficit’ may carry negative connotations, this situation is more complex. International trade has positively impacted the U.S. economy—importing more than we export has largely benefited Americans,” stated Elizabeth Renter, a senior economist at NerdWallet. “Thus, a shrinking trade deficit should be viewed with caution regarding its implications.”
On a year-to-date basis, the deficit has increased by 65.7% compared to the same period last year.
The largest trade imbalance was recorded with China at $19.7 billion, followed by the European Union at $17.9 billion and Vietnam at $14.5 billion.
In recent trade-related updates, Trump announced that further discussions with China have occurred and more are anticipated soon. He mentioned a 90-minute conversation with Chinese President Xi Jinping, describing it as a “very good” discussion.
