US trade deficit surged in March and China imports sank before Trump’s tariff roll-out

The US trade deficit widened to a record high in March as businesses boosted imports of goods ahead of President Donald Trump’s sweeping tariffs, which dragged gross domestic product into negative territory in the first quarter for the first time in three years.

The report from the Commerce Department on Tuesday showed the nation imported a record amount of goods from 10 countries, including Mexico and Vietnam. Imports from China were, however, the lowest in five years and could drop further as Trump has hiked duties on Chinese goods to a staggering 145 per cent.

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.

“Businesses are clearly scrambling as they try to find a way through this time of unprecedented change, but the worst is undoubtedly yet to come because the import tariff collections did not start to roll in earnest until after the White House Liberation Day announcement on April 2,” said Christopher Rupkey, chief economist at FWDBONDS. “There are still no trade deals announced in Trump 2.0.”

The trade gap jumped 14.0 per cent, or US$17.3 billion, to a record US$140.5 billion, the Commerce Department’s Bureau of Economic Analysis (BEA) said on Tuesday. Economists polled by Reuters had forecast the trade deficit rising to US$137.0 billion.

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. They were boosted by a US$22.5 billion jump in consumer goods to an all-time high, mostly pharmaceutical preparations.

Capital goods imports increased US$3.7 billion to a record high, reflecting a solid rise in computer accessories. Imports of automotive vehicles, parts and engines increased US$2.6 billion, driven by passenger cars.