The U.S Trade Deficit is Surging, But Economists Say It Won’t Last Long

Businesses stockpiled imported goods in March before President Donald Trump’s tariffs took hold, new trade data showed Tuesday—but economists said the surge won’t last long.

The U.S. trade deficit soared 14% to reach $140.5 billion in March, the highest level ever recorded, according to Bureau of Economic Analysis and Census Bureau data. The trade deficit nearly doubled in the first quarter compared to the same time last year. 

Increased imports drove the surge, as businesses stocked up on foreign goods before tariffs took effect, economists said.

“Even coming after large increases in the preceding months, the March deficit jumped amid a rapid stocking up of high-value consumer goods, most notably pharmaceutical preparations,” wrote Moody’s Analytics Economist Mark Hopkins. 

Trade Deficit Expected to Fall Once Tariffs Are Felt

Economists anticipated the jump after preliminary data earlier this month initially indicated that imports were surging.

Following up on his campaign promise, Trump has instituted a series of tariffs on foreign imports, which are expected to push inflation higher and weaken U.S. trade. Many U.S. tariffs weren’t scheduled to take effect until April, and some were postponed until even later as negotiations take place. 

“This gives businesses a bit more time to get product in ahead of tariffs, and suggests we may see a last-ditch effort in the April data. But beyond that, we expect trade to slow materially,” wrote Wells Fargo economists Shannon Grein and Tim Quinlan.

Because of the timing of tariffs, economists expect the trade deficit to drop significantly in the upcoming months.

“Even if tariffs are rolled back significantly in the weeks or months ahead, the large front-running that has occurred means businesses won’t need to source as much product as they unwind inventory,” the Wells Fargo note said.