US Trade Deficit Soars To Record High In March As Companies Rush To Beat Trump’s Tariffs

U.S. trade deficit for March surged to a record high as companies and importers rushed to beat President Donald Trump’s tariffs.

According to data released by the Commerce Department on Tuesday, the March trade deficit surged 14% sequentially to $140.5 billion, ahead of a Bloomberg estimate of $137.2 billion.

The data showed that imports of pharmaceutical preparations, accounted for in the consumer goods category, contributed the most to the surge in the deficit.

Capital equipment and automobile imports also increased during the month. Total imports increased 4.4% in March, while exports rose just 0.2%.

Imports of pharmaceutical preparations alone jumped 71% to $50.4 billion during the period.

The widening trade deficit during the first quarter also weighed on the gross domestic product (GDP), which contracted an annualized 0.3%.

According to a Reuters report, imports from 10 countries rose to record levels, but those from China fell to a five-year low.

Pharmaceutical imports have so far been exempted from Trump’s initial batch of tariffs.

However, the Trump administration on Monday said it would announce tariffs on pharmaceutical imports in two weeks, while the President signed an executive order earlier in the day to boost the country's pharmaceutical manufacturing capabilities.

The Reuters report cited FWDBONDS chief economist Christopher Rupkey saying the worst is yet to come.

“Businesses are clearly scrambling as they try to find a way through this time of unprecedented change, but the worst is undoubtedly yet to come because the import tariff collections did not start to roll in earnest until after the White House Liberation Day announcement on April 2,” Rupkey said.

However, President Trump said there is a possibility of striking a few trade deals this week.

At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 0.50%.

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