US goods imports plunge in April as tariffs bite, narrowing trade deficit sharply

The United States saw a record-breaking decline in goods imports in April, as President Donald Trump’s sweeping tariffs began to reshape the country’s trade landscape. Imports plummeted by 19.8 per cent from March to $276.1 billion, the largest monthly drop since the Census Bureau began tracking the data in 1992, according to figures released on May 30.

The collapse in imports followed a frenzied import rush in March, when businesses scrambled to stockpile foreign goods ahead of Trump’s so-called “liberation day” tariff hike announced for April 2. That front-loading sent the March trade deficit soaring to $162.3 billion, but the tide turned sharply in April as US companies slammed the brakes on new shipments.

As a result, the goods trade deficit narrowed by 46 per cent to $87.6 billion, the smallest gap in 18 months. Exports, meanwhile, edged up 3.4 per cent to $188.5 billion, adding to the positive swing in trade data.

Tariff turmoil and economic whiplash

The abrupt reversal in trade volumes has distorted US economic readings. The import surge in March contributed to a 0.2 per cent annualised decline in first-quarter GDP, marking the country’s first contraction since 2022. However, economists now expect a rebound in the second quarter (Q2).

The Atlanta Federal Reserve on May 30 revised its GDP forecast for the second quarter sharply upward, from 2.2 per cent to 3.8 per cent, citing the improvement in net trade.

JPMorgan echoed the trend, upgrading its Q2 growth outlook to 4 per cent, though it cautioned that “swings in trade volumes may be making it difficult to measure underlying growth.” Over the first half of the year, the bank sees average growth at around 2 per cent.

Consumer goods imports were hit hardest in April, falling 32 per cent to $69.6 billion. Industrial supply shipments dropped 31 per cent, and automotive imports slid 19 per cent, the Census Bureau said. Analysts believe declines in high-value categories such as pharmaceuticals, computer equipment, and precious metals drove much of the drop.

Despite a recent US-China deal to temporarily reduce tariffs, the situation remains fluid. Trump accused Beijing on May 30 of “totally violating” the agreement via a Truth Social post, stoking fears of renewed friction.

A US trade court briefly ruled the tariffs illegal earlier this week, but they were reinstated by a federal appeals court the following day, pending further review.

Economists warn that volatility could persist in the coming months, suggesting that inventory drawdowns may dampen GDP growth before summer’s end.