US Trade Deficit Plummets 56 Percent as Trump’s Tariffs Take Hold

Imports fell and exports rose to a record high.

The Seattle Bridge container ship, sailing under the flag of Panama, in the background of stacked containers in the Port of Los Angeles on May 6, 2025. Frederic J. Brown/AFP via Getty Images

The U.S. trade deficit dropped sharply in April, driven by President Donald Trump’s sweeping global tariffs that upended international trade.

According to the Bureau of Economic Analysis, the goods and services trade gap plummeted by 56 percent to $61.6 billion, from $138.3 billion, the lowest since August 2023.

Imports fell by more than 16 percent to a six-month low of $351 billion, down from the all-time high of $419.4 billion registered in April.

The largest import declines were observed in consumer goods (negative $33 billion), industrial supplies and materials (negative $23.3 billion), and automotive vehicles, parts, and engines (negative $8.3 billion).

Exports rose by 3 percent to a record high of $289.4 billion, driven by higher sales of finished metal shapes ($10.4 billion) and nonmonetary gold ($4.2 billion).

The United States’ trade deficits with other countries shrank in April.

The U.S. shortfall with China declined to $19.7 billion from $24.2 billion. The trade gap with the European Union plummeted to $17.9 billion from $48 billion. The deficit with Ireland decreased to $9.5 billion from $19.9 billion.

However, the United States’ trade deficit with Taiwan widened to $9.7 billion from $8.9 billion, and its deficit with Vietnam also increased to $14.5 billion from $14 billion.

The latest trade figures come a week after the Commerce Department reported that the U.S. goods deficit nearly halved in April to $87.6 billion from a record $162.3 billion in March.

Both figures suggest that the U.S. economy will enjoy a significant rebound in the second quarter after contracting 0.2 percent in the first three months of 2025.

The widely watched Atlanta Federal Reserve’s GDPNow Model, a running real-time growth estimate, suggests the economy will expand by 4.6 percent in the current quarter.

Additionally, revenues from tariffs continue to rise, reaching an all-time high of more than $23 billion in May.

Trade Stabilization

Meanwhile, despite the frenzy that occurred ahead of the president’s sweeping tariff measures, industry figures suggest international trade flows have stabilized.

According to Vizion’s ocean booking tracking data, global container bookings increased in the first three weeks of May.

Still, a recent report by the National Retail Federation and Hackett Associates suggests import cargo levels are expected to register the first year-over-year decline since 2023.

“We are starting to see the true impact of the tariffs on the supply chain,” said Jonathan Gold, the association’s vice president for supply chain and customs policy.

Overall, the outlook is uncertain as Trump’s on-again, off-again tariff strategy and legal hurdles present challenges to worldwide trade flows.

The latest trade conflict involved U.S.–China trade relations.

On May 30, Trump and his team accused the Chinese communist regime of violating the 90-day trade truce and slow-walking provisions of the Geneva deal.

Days later, Beijing claimed that the United States had violated the terms of the May 12 deal, which had seen the U.S. tariff rate on Chinese goods entering the country temporarily fall from 145 percent to 30 percent.

Trump said in a June 4 Truth Social post that Chinese leader Xi Jinping is “very tough” and “extremely hard to make a deal with.”

Trump separately confirmed on Truth Social that he finished “a very good phone call” with Xi on June 5 that lasted about 90 minutes.

“There should no longer be any questions respecting the complexity of Rare Earth products,” Trump said. “Our respective teams will be meeting shortly at a location to be determined.”

Talking Trade Deficits

Trump and senior administration officials have promoted tariffs as a tool to eliminate the trade deficit, something they view as an economic and national security threat.

“This is not sustainable,” the president told reporters aboard Air Force One shortly after his reciprocal tariffs announcement in April.

“The United States can’t lose $1.9 trillion on trade. We can’t do that and also spend a lot of money on NATO in order to protect European nations, we cover them with military and we lose money on trade. The whole thing is crazy, and I got elected on that basis.”

Economists have debated the efficacy of focusing on the trade deficit, arguing that it is neither inherently good nor bad, but rather situational.

Minneapolis Federal Reserve President Neel Kashkari, for example, said that it is natural for the United States to maintain a trade deficit because investors view it as the best place to invest.

“If we’re not going to have a trade deficit going forward, then investors must conclude that there are other attractive places to invest too,” Kashkari said in an April 13 interview with CBS News’ “Face the Nation with Margaret Brennan.”

In a March 17 research note, Neil Shearing, group chief economist at Capital Economics, said that “there is a truth in the idea” that immense trade imbalances present challenges requiring solutions.

“The concern instead stems from both the size of America’s current account deficit (which is now running at just over 4 [percent] of GDP) and also its persistence,” Shearing wrote. “The last time the US ran a surplus on its current account was nearly 35 years ago.”

Appearing on Capitol Hill on June 4, Commerce Secretary Howard Lutnick told Sen. John Kennedy (R-La.) that trade deficits are fine if other countries have products that the United States cannot produce.

“Let’s say there was a company that had the cure for cancer—let’s call it Cancer Cure—and we were buying it and it was located in another country,” Lutnick said. “We would obviously have a trade deficit with them because they have the only one of it.”

In 2024, the U.S. goods and services deficit was $918.4 billion.