Duties-related stockpiling boosts US goods trade deficit to record high
WASHINGTON — The US trade deficit in goods widened to a record high in March as businesses ramped up efforts to bring in merchandise ahead of President Donald Trump’s sweeping tariffs, suggesting trade was a large drag on economic growth in the first quarter.
While some of the imported goods ended up in warehouses at wholesalers, economists said this would not blunt the anticipated hit on gross domestic product from the deterioration in the trade deficit.
The report from the Commerce Department’s Census Bureau prompted economists to sharply downgrade their GDP estimates for last quarter to show a steeper decline rather than growth just stalling.
Goldman Sachs now sees GDP contracting at a 0.8-percent annualized rate while JPMorgan forecasts output declining at a 1.75-percent pace.
The economy grew at a 2.4-percent rate in the fourth quarter.
The government is scheduled to publish its advance GDP estimate for the January-March quarter on Wednesday, which will coincide with Trump’s 100 days in office.
The disruptions wrought by Trump’s ever-shifting tariffs position, which has sowed confusion and uncertainty among households and businesses, were also evident in other reports on Tuesday.
5-year low
Consumer confidence plunged to a nearly five-year low in April, while job openings in March decreased to the lowest level since last September.
But businesses are not yet responding to the heightening uncertainty by firing workers, likely keeping the economy afloat for now.
“A grab bag of economic releases points to a weaker economy in the first half of 2025,” said Bill Adams, chief economist at Comerica Bank.
“Unless something changes quickly to reassure Americans that the economy will be okay, the headwind from less consumer discretionary spending and less business capital spending could grow in the second quarter,” Adams said.
The goods trade gap increased 9.6 percent to $162 billion, the highest on record, the Commerce Department’s Census Bureau said.
Economists estimated trade could have sliced off as much as 1.9 percentage points from GDP last quarter.
Goods imports soared $16.3 billion to an all-time high of $342.7 billion. They were driven by a 27.5-percent jump in imports of consumer goods.
There were also solid increases in imports of automotive vehicles and capital goods.
But imports of industrial supplies, which had been boosted by non-monetary gold, declined 13.5 percent. Food imports fell as did those of other goods.
