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The trade deficit narrowed in April as imports plummeted. The U.S. trade deficit in goods and services fell to a seasonally adjusted $61.6 billion in April from an upwardly-revised $138.3 billion in March. The main driver of the narrowing was a $68.9 collapse in imports.
The trade deficit is a measure of the difference between what the U.S. buys from foreign nations and what the country sells overseas. Much of the overall trade balance improvement in April came from large swings in bilateral trade among a few key trading partners targeted by the Trump administration. Imports from Canada and the resulting bilateral deficit narrowed in April to their smallest levels since early 2021, while imports from China fell to their lowest level since early 2020. Year-to-date, exports have increased 5.5%, while imports have increased 17.8% from the same period a year ago. While softening economic activity in advanced economies will weigh on demand for US goods and services abroad, the recent weakness of the US dollar may offset some of the weaker overseas demand for US products.
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Exports rose to an all-time high in April. Total exports rose 3% from the previous month. Exports rose on the back of stronger sales of industrial supplies and materials. Outbound shipments of capital goods also picked up, while exports of autos and parts and consumer goods fell. Exports of services rose by $2.1 billion due to the increased sales of travel exports, which include travel spending by foreign visitors in the U.S.
Imports fell to their largest one-month decline on record. Total imports fell 16.3% in April following a record increase in March. Imports of goods fell 19.9%. There was weakness across goods categories, with the largest drop in consumer goods imports, which included a reversal of a gain in pharmaceutical products in March. Imports of autos also fell the most outside of the pandemic. The April data shows that the temporary splurge by US businesses trying to get ahead of tariffs during the first quarter of the year has come to an end. Many of these tariffs were scaled back or postponed by President Trump.
Source: Bureau of Economic Analysis
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