March Trade Deficit Hits $140.5 Billion, Up 14% from Previous Month
Imports of Pharmaceuticals Surge Ahead of Trump’s Announced Itemized Tariffs
The United States recorded its largest-ever trade deficit in March of this year. This was the result of companies stockpiling imports to secure inventory ahead of the full implementation of President Donald Trump’s high-tariff policy.
According to the U.S. Department of Commerce on May 6 (local time), the U.S. trade deficit in March was tallied at $140.5 billion. This deficit was 14% higher than the previous month. It also exceeded the median estimate of $137.2 billion by Bloomberg experts.
Exports rose 0.2% from the previous month to $278.5 billion, while imports surged 4.4% over the same period to $419.0 billion, widening the deficit significantly.
Companies accelerated orders and secured inventories of imported goods ahead of the Trump administration’s tariff implementation. Imports of consumer goods increased by $22.5 billion from the previous month, driving the overall rise in imports. In particular, imports of pharmaceuticals?which President Trump had announced would be subject to itemized tariffs?increased by $20.9 billion during the same period. Imports of capital goods such as computer accessories rose by $3.7 billion, and imports of automobiles, auto parts, and engines increased by $2.6 billion.
By country, the largest trade deficit was with the European Union at $48.3 billion, followed by Ireland ($29.3 billion), China ($24.8 billion), and Mexico ($16.8 billion). The trade deficit with South Korea was recorded at $6.8 billion.
U.S. imports of Chinese products declined in March. Before imposing a 125% reciprocal tariff on China in April, President Trump had imposed a 20% tariff on fentanyl from China twice, in February and March.
The market had expected that, ahead of the full implementation of tariff policies, U.S. companies would increase imports of foreign consumer and intermediate goods to build up inventories. As a result of the import surge, U.S. gross domestic product (GDP) in the first quarter decreased by an annualized rate of 0.3% compared to the previous quarter, marking the first contraction in three years since the first quarter of 2022 (-1.0%).
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