US Trade Deficit Hits Historic High in March

A steep rise in imports pushed the US trade deficit to a record $215 billion in March, as businesses rushed to stockpile goods before broad new tariffs proposed by the White House take effect. The aggressive tariff strategy aims to fix long-term trade imbalances, but could disrupt supply chains and weigh on economic growth.

The trade gap, which tracks the difference between what the US exports versus what it imports, nearly doubled in one year. The rapid March increase appears fueled by fear of rising costs, particularly in sectors like pharmaceuticals that source heavily from abroad.

Commerce Department data showed US imports reached $419 billion in March, up nearly $18 billion from February, while exports inched up by just $500 million to about $278.5 billion. Pharmaceutical products accounted for almost all of the $20 billion surge from Ireland alone, suggesting businesses are trying to lock in stock ahead of anticipated pricing shocks.

Mounting tariff threats and volatile implementation timelines are injecting fresh uncertainty into international trade. The administration has delayed some levies, especially targeting countries other than China, but several broad import taxes remain in effect or are close to activation.

While policymakers argue that tariffs will help domestic manufacturing and generate federal revenue, economists warn of higher consumer prices and operational costs for companies reliant on global imports. Many firms are front-loading purchases now, but that burst may fade, potentially weakening economic activity in coming quarters.

Import activity grew at a 41% annualised pace in the first quarter, slashing 5 percentage points from GDP and contributing to a 0.3% economic contraction - the first in three years. The record March deficit follows a similar spike in January, reflecting persistent strain in US trade policy.

Source: Australian Financial Review, Investopedia, Fox Business, Bureau of Economic Analysis, Census.