U.S. trade deficit narrows sharply in April; imports post record drop

The U.S. trade deficit narrowed sharply in April, with imports dropping by the largest margin on record as the front-loading of goods ahead of tariffs eased. This could provide a boost to economic growth this quarter.

The trade gap contracted by a record 55.5 percent to $61.6 billion, the lowest level since September 2023, the Commerce Department's Bureau of Economic Analysis said Thursday. March data was revised to show the trade deficit widened to an all-time high of $138.3 billion, slightly less than the previously reported $140.5 billion.

A rush to beat import duties helped widen the trade deficit in the first quarter, contributing to the 0.2 percent annualized decline in gross domestic product last quarter. The deficit's contraction suggests trade could significantly add to GDP this quarter, though much depends on inventory levels.

Imports fell by a record 16.3 percent to $351 billion in April. Goods imports plunged 19.9 percent to $277.9 billion, weighed down by a $33 billion drop in consumer goods, mostly pharmaceutical preparations from Ireland. Imports of cellphones and other household goods fell $3.5 billion.

Imports of industrial supplies and materials declined by $23.3 billion, reflecting decreases in finished metal shapes and other precious metals.

Motor vehicle, parts and engine imports dropped $8.3 billion, with passenger cars accounting for much of the decline. The front-loading of imports is likely not over yet, as higher duties for most countries have been postponed until July, with those on Chinese goods delayed until mid-August.

Exports rose 3 percent to a record $289.4 billion. Goods exports increased 3.4 percent to a record $190.5 billion, boosted by a $10.4 billion jump in industrial supplies and materials, mainly finished metal shapes, nonmonetary gold and crude oil.

Capital goods exports increased by $1 billion, led by computers. However, exports of motor vehicles, parts and engines fell $3.3 billion, weighed down by passenger cars, trucks, buses and special-purpose vehicles.

Exports of services rose $2.1 billion to $98.9 billion, supported by travel despite reports of decreased tourist visits amid trade tensions and immigration crackdowns.

(With input from Reuters)