US trade deficit hits record as companies front-load pharmaceuticals
Summary
The deficit ballooned to $140.5 billion in March, as businesses stockpiled goods to get ahead of tariffs imposed the following month.
The U.S. trade deficit ballooned 14% to a record $140.5 billion in March, as businesses stockpiled goods to get ahead of sweeping tariffs that President Trump imposed the following month.
The value of imported goods totaled $346.8 billion, according to Census Bureau data, continuing a sharp increase that began in January. Nearly all of the $22.5 billion surge in imported consumer goods for March were pharmaceutical products, which the Trump administration is currently considering to hit with tariffs. Imports of computer accessories, automobiles, and car parts and engines also increased.
The rush may be short-lived. Trump announced tariffs on all imported goods on April 2, and ratcheted up his trade war with China. Cargo shipments from China have slowed considerably, with additional tariffs on Chinese goods now pegged at 145%.
“The record has only been a result of front running," and “the trade deficit should be narrower in April," said Bradley Saunders, economist at Capital Economics.
Some economists say businesses continued to front-load in April as Trump put a 90-day pause on “reciprocal" tariffs, or the higher duties for some countries. The concentration on pharmaceuticals also means companies didn’t buy as much of everything else, from toys to apparel.
Omar Sharif, an economist at the advisory firm Inflation Insights LLC, said as the Trump administration takes time to possibly reach trade deals with other nations, businesses might begin to run down on stockpiles of inventory.
For American consumers, he said it meant “store shelves may be emptier sooner than we thought."
The sharp rise in the goods deficit, to a record $163.5 billion, was offset by a $23 billion surplus in services trade, which includes travel, transportation and financial services. The U.S. exported about $95 billion in services in March.
The March report capped off a quarter that saw the U.S. import $1 trillion in goods, up from $796 billion during the same period last year. Meanwhile, exports of U.S. goods have only risen modestly, reaching $539 billion in the first quarter. That imbalance pushed the goods deficit to $466 billion for the quarter, up from $279 billion a year ago.
During the quarter, the U.S. imported $51 billion more in goods from Switzerland than it did during the same period a year earlier—much of that in gold, according to Census data. The precious metal, often recast in Swiss refineries, is viewed as a haven at times of heightened risk.
A surge of U.S. imports during the quarter also came from Ireland, Mexico, Taiwan and Vietnam.
Trade data for April is due for release in early June.
