WASHINGTON: The US trade deficit widened to a record high in March as businesses boosted imports of goods ahead of tariffs, which dragged gross domestic product into negative terrain in the first quarter for the first time in three years.
The trade gap jumped 14 per cent to a record US$140.5 billion from a revised US$123.2 billion in February, the Commerce Department’s Bureau of Economic Analysis (BEA) said on Tuesday (May 6).
Economists polled by Reuters had forecast the trade deficit rising to US$137.0 billion from the previously reported US$122.7 billion in February.
President Donald Trump’s sweeping tariffs, including raising duties on Chinese imports to a staggering 145 per cent, fueled a rush by businesses to bring in merchandise to avoid higher costs.
While reciprocal tariffs with most of the United States’ trade partners were suspended for 90 days, duties on Chinese goods came into effect in early April, triggering a trade war with Beijing.
Imports vaulted 4.4 per cent to an all-time high US$419.0 billion in March. Goods imports soared 5.4 per cent to a record US$346.8 billion. Exports climbed 0.2 per cent to US$278.5 billion, also a record high. Exports of goods increased 0.7 per cent to US$183.2 billion.
The government reported last week that the trade deficit cut a record 4.83 percentage points from GDP last quarter, resulting in the economy contracting at a 0.3 per cent annualised rate, the first decline since the first quarter of 2022.
Economists expect the flood of imports to ebb by May, which could help GDP to rebound in the second quarter.
They, however, caution that the lift from subsiding imports could be offset by a drop in exports as other nations boycott American goods and travel.
There has been a decrease in visitors to the US, especially from Canada, in protest over the punitive tariffs as well as an immigration crackdown and Trump’s musings about annexing Canada and Greenland.
Source: CNA
