Trade deficit fell by a record amount in April as demand dropped for imports
The U.S. trade deficit with its global trading partners experienced a significant decrease in April, marking the largest decline on record. This drop can be attributed to a decrease in imports as companies and consumers no longer rushed to get goods ahead of President Donald Trump’s tariffs. The deficit fell to $61.6 billion, a steep decline of $76.7 billion from the previous month and below the expected forecast of $66.3 billion.
The surge in imports prior to Trump’s announcement of tariffs on April 2, dubbed “Liberation Day,” was met with aggressive retaliatory measures. Trump imposed 10% tariffs on U.S. imports across the board and introduced reciprocal tariffs targeting countries engaged in unfair trade practices. However, as negotiations progressed, Trump softened his stance by suspending reciprocal charges and reducing levies on China specifically.
In April, imports plummeted by 16.3% to $351 billion, while exports increased by 3%. This shift in trade dynamics contributed to the decrease in the deficit. Despite the positive implications of a shrinking trade deficit, experts caution against interpreting it solely as a positive development. International trade has historically benefited the U.S. economy, and a reduction in the deficit may not necessarily indicate overall economic health.
Year-to-date, the deficit has increased by 65.7% compared to the same period in 2024. The largest trade imbalances were with China ($19.7 billion), the European Union ($17.9 billion), and Vietnam ($14.5 billion). Recent updates on the trade front include Trump’s announcement of additional talks with China, with the possibility of further negotiations in the near future. Trump described a recent 90-minute conversation with Chinese President Xi Jinping as “very good.”
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