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In April, imports to the US experienced a dramatic decline of 20%, marking the largest monthly drop ever, driven by a flurry of tariffs introduced by President Donald Trump.
This decline was a direct consequence of businesses rushing to bring products into the country earlier in the year to avoid impending new taxes on imports.
Purchases from key trading partners like Canada and China decreased significantly, reaching their lowest points since 2021 and 2020, respectively, according to the Commerce Department.
This downturn contributed to a nearly 50% reduction in the US trade deficit for goods, which represents a historic decline.
“The April trade report reflects the significant effects of tariffs now being felt,” noted Oxford Economics, advising caution in interpreting the latest data due to earlier surges in activity this year.
Since his return to office in January, Trump has escalated import duties on specific products like steel, aluminum, and cars, while also applying a blanket 10% tariff on most goods from international trading partners.
He had considered higher duties on some countries’ exports but later suspended those rates for a 90-day period to enable negotiations.
Trump has stated that these measures aim to revitalize domestic manufacturing and improve leverage in trade discussions.
White House officials are currently engaged in focused dialogues to finalize agreements before the impending 90-day deadline.
On Thursday, President Xi Jinping of China and Trump held a phone call to facilitate progress in negotiations, as the delicate agreement between the two nations showed potential signs of weakening.
In a social media update, Trump described the call as “very productive” regarding trade matters and mentioned that both teams would reconvene soon.
Chinese state media reported a mutual agreement for more discussions, including an invitation for Trump to visit.
Trump’s extensive tariff policies have driven the average effective tariff rate in the US to its highest level since the 1930s, according to analysts.
Following the earlier activity surge, the sudden adjustments have prompted a noticeable slowdown in trade as companies deliberate their next steps.
In Mexico, the steel industry reported a 50% reduction in exports to the US last month.
In Canada, the trade deficit soared to a record high last month, expanding to C$7.1 billion as exports to the US declined for the third consecutive month.
The latest report from the US Commerce Department indicated that few product categories remained unaffected by these shifts.
Reportedly, imports of passenger vehicles fell by a third between March and April, while pharmaceutical products were impacted, and imports of consumer goods, including cell phones, art, furniture, toys, and clothing, also decreased.
Conversely, imports from Vietnam and Taiwan surged after the initial imposition of higher tariffs on their exports was suspended, as indicated by the report.
Despite the significant monthly drop, total US goods imports in the initial four months of the year have risen by approximately 20% in comparison to the same period in 2024.
Exports for the same timeframe have increased by about 5% compared to 2024.
The overall deficit for goods and services in April was $61.6 billion, down from $138.3 billion in March.