In March, the U.S. trade deficit in goods and services hit a record high of $140.5 billion, marking a staggering 92.6% increase year-to-date. This surge is largely attributed to companies and consumers importing goods in anticipation of President Trump’s looming global tariffs set to take effect on July 6. Imports rose 23.3% in 2023, with an increase of $17.8 billion from the previous month. Meanwhile, exports from the U.S. only increased by $500 million. The tariffs on China currently exceed 145% and are expected to rise further.
In March, consumer goods imports reached an all-time high, particularly due to a significant rise in pharmaceutical imports. Other categories, including apparel, furniture, and textiles, also saw increases from February. The first quarter of 2023 witnessed a 0.3% contraction in U.S. gross domestic product (GDP), attributed to the largest negative impact from net exports in over 50 years. Consumer spending also showed signs of slowing, growing just 1.8%, the weakest rate since mid-2023.
Economists predict a decrease in the surge of imports in the second quarter, which may help GDP rebound into positive figures. However, Goldman Sachs analysts assign a 45% chance of recession within the next year, citing expectations for further tariff increases affecting various sectors and the potential activation of previously paused tariffs.
In related news, Canada reported a 6.6% drop in its exports to the U.S. for two consecutive months, while exports to other countries, including the U.K., Netherlands, Hong Kong, and Germany, increased, with crude oil being the primary export to two of these nations.
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