Rush to beat tariffs causes U.S. trade deficit to blow out to record levels
The Sandbox Daily (5.6.2025)
Welcome, Sandbox friends.
Today’s Daily discusses:
U.S. trade deficit widens to a record level
Let’s dig in.
Blake
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Quote of the day
“Experience is what you got when you didn’t get what you wanted.”
- Howard Marks
U.S. trade deficit at a record level
The U.S. trade deficit – a balance which measures the difference in value between imported and exported goods and services – widened to a record $140.5 billion in March, a 14% increase from the prior month as companies rushed to import products ahead of tariffs. The increase was led by consumer goods (mostly pharmaceuticals), computer accessories, and autos.
The 12-month total deficit also hit a record level of $1.1 trillion.
The dramatic widening of the trade deficit in the first quarter was the key reason the U.S. economy contracted for the first time since 2022, falling by an annualized -0.3% in Q1. Net Exports detracted nearly five percentage points – most on record.
Leveling out the trade deficit is a key aim of President Trump's trade policies. As companies anticipated new tariffs earlier this year, though, that had the opposite effect, spurring businesses to transfer goods into the country as quickly as they could.
For example, Apple caught headlines recently when it was revealed the tech giant chartered five cargo planes to ferry over 600 tons of iPhones into the United States to avoid tariff charges.
Despite a weaker U.S. dollar, the trade deficits with most key trading partners widened, reaching new records with the European Union and Mexico.
Data covering April, which is due in early June, will give a clearer picture of how trade has evolved since President Trump’s April 2 “Liberation Day” reciprocal tariff announcement.
Sources: Advisor Perspectives, Ned Davis Research
That’s all for today.
Blake
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