The US ran a record trade deficit in March. It will be worse in April

In March, the US trade deficit with other countries reached unprecedented levels, driven by a rush to purchase goods ahead of anticipated tariffs. This surge comes amidst the backdrop of the US President’s striking ‘America’s Liberation Day’ tariff announcement, with retaliatory tariffs following in April.

The trade deficit is an important fundamental pressure factor on the dollar, and it promises to become even stronger in April’s data. As a result, we are seeing temporary anomalies in the import numbers, which have been on a tear since December, adding over 27% to March last year.

Exports, on the other hand, are still within the trend of the last three years, adding 6.7% YoY to $278.5bn. Still, it doesn’t quite match the record-breaking $140.5 billion deficit and $419 billion in imports.

These alarming numbers are likely just a preview, with a downturn expected in the coming months—though it will probably be less dramatic. This will give the illusion that tariffs are working. However, it’s more accurate to take a long-term view, factoring in both the unusual spike in imports and the potential drop that may follow. It would not be surprising if the net effect is very controversial.