LIVE MARKETS-Pre-Liberation Day trade deficit hits record

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PRE-LIBERATION DAY TRADE DEFICIT HITS RECORD

The trade gap USTBAL=ECI, or the difference in the value of goods and services imported to the U.S. and those exported abroad, widened in March by 14.0% to $140.5 billion, the deepest monthly trade deficit on record.

The reading overshot consensus by $3.5 billion.

Under the hood, the Commerce Department's report showed a paltry 0.2% increase in exports was handily canceled out by a 4.4% surge in imports, which account for the lion's share of the United States' total international trade.

The data tell a story similar to last week's advance take on first quarter GDP, which showed a surge in imports and private inventories as Americans girded their loins for President Trump's market-rattling April 2 tariff blitz.

"Looking ahead, this fast-forwarding of imports to beat tariffs will come to an end as the tariffs are implemented," writes Carl Weinberg, chief economist at High Frequency Economics. "Then, the economy will experience a vortex in imports because transactions that normally would have been done in Q2 or beyond will already have been executed."

"So look for a sharp drop in imports starting with April data."

While the report predates Trump's Liberation Day lawn party, a gander at shifting imports from the United States' biggest trading partners could be looked back upon in future months as the time of a momentous shift in international trade relations.

The closely watched U.S.-China goods trade gap narrowed by 15.3% to $17.9 billion after 20% tariffs were implemented on Chinese goods.

But remember, Trump had yet to jack that up to 145%.

"The additional 20% tariff on imports from China in place in March began to bite, with the share of imports from China falling to its lowest point in 25 years," says Matthew Martin, senior U.S. economist at Oxford Economics. "Even with exemptions, the average tariff rate rose to over 100% in April, which will push that China's share of total imports sharply lower."

(Stephen Culp)

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