Link Securities | The Department of Commerce reported that the US trade deficit stood at $140.5 billion in March, reaching a new monthly record and exceeding the $132.4 billion projected by the FactSet consensus of analysts. In February, the trade deficit stood at $123.2 billion.
In March, imports rose 4.4%, reaching a new all-time high of $419 billion, as many customers brought forward purchases in anticipation of the upcoming tariff announcements in April. Purchases increased in the case of pharmaceutical preparations, automobiles, computer accessories and transportation. In contrast, imports decreased in the case of finished metal forms, non-monetary gold, crude oil and travel.
Exports rose by just 0.2%, but also reached a record high of $278.5 billion. Sales of automobiles, natural gas, non-monetary gold, computer accessories, transportation and financial services increased, but declined in the case of civil aircraft and travel.
Assessment: It should be remembered that the sharp increase in the trade deficit during the period was what caused the contraction of US GDP in Q1 2025 in annualised quarter-on-quarter terms. Many customers have chosen to bring forward their purchases to avoid the entry into force in April of the import tariffs implemented by the US Administration. This trend is expected to continue, albeit more moderately, during the 90-day ‘grace period’ granted by the US administration to many countries for the entry into force of what have been described as ‘reciprocal’ tariffs. During this period, the US has given itself time to negotiate new trade agreements on a country-by-country basis.
