US goods imports plummeted by 20% in April, marking the largest single-month decline on record. This dramatic drop directly reflects the impact of President Trump’s sweeping tariff increases.
The sharp decrease follows a surge in imports earlier this year, as businesses anticipated the new tariffs and rushed to import goods ahead of schedule.
Imports from key trading partners like Canada and China reached their lowest points since 2021 and 2020 respectively, according to the Commerce Department.
Consequently, the US goods trade deficit nearly halved, representing a record reduction.
Oxford Economics observed that “the impact from tariffs has well and truly arrived,” while cautioning about interpreting the figures in isolation from the earlier surge in activity.
Since January, the Trump administration has significantly increased import taxes on various goods, including steel, aluminum, cars, and a broad range of products from numerous countries.
Higher tariffs were briefly imposed on some specific countries, later suspended for 90 days to facilitate negotiations.
The administration maintains that these measures aim to bolster domestic manufacturing and strengthen its negotiating position in international trade.
Intense negotiations are underway to finalize agreements before the 90-day suspension expires next month.
Presidents Trump and Xi Jinping held a phone call on Thursday to advance these discussions, amid signs of increasing tension between the two nations.
President Trump described the call as “very good,” focusing on trade, with further meetings planned. Chinese state media reported agreement on continued talks and an invitation for President Trump to visit.
Analysts indicate that Trump’s tariffs have driven the average effective US tariff rate to its highest level since the 1930s.
Following the earlier import surge, the abrupt tariff changes have caused a sharp slowdown in trade as businesses adapt to the new landscape.
Mexico’s steel industry reported a 50% drop in US exports last month. Canada’s trade deficit reached a record high of C$7.1 billion, with exports to the US falling for the third consecutive month.
The Commerce Department report highlighted the widespread impact, with significant declines across numerous product categories.
Passenger car imports fell by a third, along with pharmaceutical products and various consumer goods, including cell phones, artwork, furniture, toys, and apparel.
Conversely, imports increased from Vietnam and Taiwan, following the temporary suspension of higher tariffs on their exports.
Despite the significant April decline, overall US goods imports for the first four months of the year are up approximately 20% compared to the same period in 2024. Exports are up about 5% for the same period.
The overall goods and services deficit in April was $61.6 billion, down from $138.3 billion in March.
Trump’s proposed 3.5% tax on remittances from foreign workers could significantly impact India, a major recipient of these funds.
Trump’s continued emphasis on tariffs, while exempting the UK from recent increases, adds to trade complexities.
The executive order increases import taxes for US companies sourcing from abroad, but maintains a 25% levy on UK goods.
Failure to finalize a US-UK agreement by July 9th will reinstate a 50% tariff on UK steel.
While tariffs are central to the President’s economic strategy, economists express concerns about escalating global trade tensions.