US Trade Deficit Hits Record in March on Pre-Tariff Imports Spike

Imports grew by 4.4 percent to a record high of $419 billion as businesses bolstered their purchases before the government announced further tariffs.

Shipping containers line the Port of Los Angeles, Calif., on March 28, 2025. John Fredricks/The Epoch Times

The U.S. trade deficit widened to a record high in March as companies accelerated their imports ahead of U.S. tariffs taking effect.

Bureau of Economic Analysis data released on May 6 show that the international trade gap—a measure of when a country’s imports exceed its exports—reached an all-time high of $140.5 billion. This is up by 14 percent from a revised $123.2 billion in February.

The monthly international trade deficit includes goods and services.

Market watchers had anticipated a trade shortfall of $137 billion.

Imports increased by 4.4 percent to a record high of $419 billion as businesses bolstered their purchases from abroad before the government made further tariff announcements.

Companies purchased a greater amount of pharmaceutical preparations, finished metal shapes, passenger cars, and computer accessories.

Exports rose at a tepid pace of 0.2 percent but hit a record $278.5 billion in March. U.S. companies shipped more industrial supplies and materials, passenger cars, and computer accessories.

America’s trade deficit with the European Union climbed to $48.3 billion from $30.9 billion, and its deficit with Ireland surged to $29.3 billion from $15.3 billion.

The U.S. trade deficit with China narrowed to $24.8 billion from $26.6 billion. The gap also diminished with Switzerland, from $18.8 billion to $14.7 billion. America’s trade deficit with Canada eased to $4.9 billion from $7.4 billion.

The Census Bureau reported last month that the goods trade deficit also soared to a record high of $161.99 billion amid businesses front-running tariffs.

So far this year, the trade deficit has dragged down economic growth.

In the first quarter, the U.S. economy contracted by 0.3 percent, fueled primarily by a 41 percent spike in imports. The Bureau of Economic Analysis subtracts imports from the gross domestic product (GDP) because the United States is purchasing more goods and services from foreign markets than domestically produced alternatives.

The previous quarter’s decrease may have been a one-off. The Federal Reserve Bank of Atlanta’s GDPNow Model estimate suggests a 1.1 percent expansion in the second quarter, fueled by an expected improvement in the trade deficit.

President Donald Trump and senior administration officials have repeatedly criticized the trade imbalance.

“Our trade deficit, driven by these nonreciprocal conditions, is a manifestation of the loss of the nation’s ability to make, to grow, to build, and the president recognizes the urgency of the moment,” U.S. Trade Representative Jamieson Greer said in a Senate Finance Committee hearing shortly after the president’s tariffs announcement in early April.

“Our large and persistent trade deficit has been over 30 years in the making, and it will not be resolved overnight, but all of this is in the right direction.”

Others have pushed back against the White House’s trade deficit concerns.

Then-U.S. Trade Representative nominee Jamieson Greer testifies before the Senate Committee on Finance on Capitol Hill in Washington on Feb. 6, 2025. Madalina Vasiliu/The Epoch Times

Minneapolis Federal Reserve President Neel Kashkari says a trade deficit signals investor confidence in the United States.

“It’s just economic math that if investors around the world say one country is the best place to invest, the math works out that that country will have a trade deficit,” Kashkari said in an April 13 interview with CBS News’ “Face the Nation.”

A 2018 Congressional Research Service paper concluded that Trump’s approach to tariffs differed “with the views of most economists.”

“Attempting to alter the trade deficit without addressing the underlying macroeconomic issues will likely be counterproductive and create distortions in the economy,” the report stated.

Volatility in Trade Dynamics

Export bookings to the United States have remained resilient despite week-to-week volatility, according to data compiled by trade tracker Vizion. For the week ending April 28, export container booking volumes slipped 3.2 percent from the previous week but increased 8.4 percent year over year.

However, U.S. exports to China have plummeted, collapsing by approximately 80 percent by the end of last month, “pointing to deep disruptions tied to sourcing shifts, policy retaliation, or softening U.S. demand,” the firm said in a report.

“Tariff adjustments in March and April may have prompted cautious booking behavior or encouraged front-loading ahead of new policies. Meanwhile, shifting demand from key global markets is influencing volumes.”

In a first-quarter earnings call on May 6, global container shipping and logistics company Matson said current trends are uncertain.

“We expect container volume and average rates in the second quarter to be lower year over year,” Matson CEO Matt Cox said in a call with shareholders and analysts.

“At the moment, it’s difficult to know if these lower volume levels are transitory or will persist for a longer time in 2025, and the duration of this lower demand period will likely depend on active negotiations taking place across the supply chain, and the timing of potential amendments to the tariffs.”

Conditions could stabilize now that the “tariff shock has passed,” says Jay Woods, chief global strategist at Freedom Capital Markets.

“We got the worst of the tariff news and are starting to ‘negotiate’ and scale things back,” Woods said in an email to The Epoch Times.

In an interview with CNBC on May 5, Treasury Secretary Scott Bessent said that U.S. officials are speaking with 17 major trading partners that “have approached us with very good trade proposals.”

“I think we’re very close to some deals,” Bessent said, adding that announcements could occur this week.

Trump recently added to his tariff plans by proposing on Truth Social a 100 percent tariff on movies produced outside the United States, saying, “We want movies made in America, again!”

He later clarified to reporters on May 5 that he would meet with America’s film industry to “make sure they’re happy” with his concept.