Importers continued to front-run the April ‘Liberation Day’ tariffs in March, sending the overall trade deficit up 14% over February numbers to $140.5 billion for the month, according to the Bureau of Economic Analysis (BEA) on Tuesday. These figures blow away the recent three-month averages driven by companies trying to get out ahead of tariffs that range from a low 10%, to as high as 145% for Chinese goods. The new tariffs took effect in the first week of April, meaning this could be the last import surge we see for a while.
Jeff Ferry, Chief Economist Emeritus at the Coalition for a Prosperous America (CPA), said, “I think the point in these numbers today is that the high imports we have seen between January and March should soon lead to lower imports over the rest of the year.”
For the first quarter of 2025, the goods and services trade deficit totaled $394.3 billion—about $190 billion higher than during the same period in both 2024 and 2023. The goods trade deficit alone reached $466.3 billion during the first quarter of this year.
The European Union was the top contributor to the U.S. goods deficit in March, totaling $48.3 billion—nearly double the U.S.-China deficit of $24.8 billion, and the U.S.-Mexico deficit of $16.8 billion.
Ireland was the biggest surprise in the March data, with the U.S. goods deficit with Ireland rising by $15.3 billion to $29.3 billion—surpassing the deficits with both China and Mexico. Much of the widening deficit with Ireland and the broader EU is likely driven by pharmaceutical imports. Of all product categories tracked by the BEA, pharmaceuticals saw the most significant month-over-month increase. Imports of pharmaceuticals hit $50.4 billion in March, up sharply from $29.4 billion in February.
The U.S. remains heavily dependent on foreign drug supplies. While pharmaceuticals were excluded from the “Liberation Day” tariffs, they may still be targeted in a future Section 232 investigation focused specifically on national security risks. CPA today praised President Trump’s signing of an unprecedented Executive Order aimed at reshoring domestic production of critical pharmaceuticals. The order, titled “Regulatory Relief to Promote Domestic Production of Critical Medicines,” marks a significant step toward ending America’s dangerous dependence on foreign-made generic drugs and strengthening U.S. economic and national security.
Pharmaceuticals were the clear outlier in import growth. Other tariff-eligible items—such as automobiles and auto parts—showed minimal signs of front-running behavior. March passenger car imports totaled $19.2 billion, up slightly from $17 billion in February. Imports of car parts and accessories came in at $12 billion in March, versus $11.9 billion the previous month.
Top 5 Deficit Items
The top deficit items for the U.S. remained firm, with gaps widening in March.
Product
Imports
Exports
Deficit
Pharmaceuticals
$50.42 billion
$9.22 billion
$41.2 billion
Finished metal*
$21.33 billion
$2.24 billion
$19.09 billion
Cars
$19.2 billion
$5.61 billion
$13.59 billion
Computers
$13.57 billion
$2.53 billion
$11.04 billion
Cell phones
$11.8 billion
$2.8 billion
$9 billion
Of the top five deficit categories, pharmaceutical imports were the standout, jumping significantly month-over-month. The finished metals category—covering goods made of steel, aluminum, and copper—actually saw a slight decline. While some of that could reflect tariff front-running, the U.S. typically runs a high and steady deficit in finished metals, comparable to gaps seen in autos and computers. Steel and aluminum remain subject to global Section 232 tariffs.
The true impact of the new tariff regime on import volumes will likely become clearer by summer. Tuesday’s figures were largely expected, given the rollout of global tariffs in early April. However, next month’s trade report could still show some residual increases, particularly from countries hit with the baseline 10% tariff, or coming from Southeast Asia, where the Trump administration eliminated the “reciprocal tariffs” that had been set much higher. Importers may interpret that change as a green light to resume sourcing from the region.
A Note on the Services Trade and Advanced Technologies
Wall Street remains the United States’ top services export. In March, financial services exports totaled $17.1 billion—meaning foreign investors were buying U.S. securities, either because their own capital markets are shallow and offer meager yields, or because they’re flush with dollars from selling goods to the U.S. and thus reinvested in American assets.
While headlines in recent weeks warned of a decline in foreign tourism to the U.S., travel still ranked as the second-largest services export for March at $16.98 billion, down from $18.2 billion in February, and $18.7 billion in January. Even so, travel exports for the first quarter of 2025 are outperforming the same period in both 2024 and 2023.
Charges for the use of intellectual property ranked third at $13.4 billion in March, totaling $40.18 billion for the first quarter. This category includes revenue from software-as-a-service (SaaS) subscriptions and payments by foreign consumers for U.S. streaming platforms such as Disney+.
The advanced technology trade deficit surged to $57.4 billion in March, up sharply from $31.9 billion in February. Once again, the deficit was led by biotechnology—driven in part by imports of advanced laboratory equipment used in R&D, and by complex, synthetic medical devices such as artificial limbs.
Outside of defense-related manufacturing, the only advanced technology category in which the U.S. maintains a trade surplus lies with aerospace. That includes high-value goods like jet engines and space-grade hardware protected by export control laws.
What we can Expect to Come Next
Again, while importers continued to front-run the April ‘Liberation Day’ tariffs in March, sending the overall trade deficit up for the month, it is important to remember that the new tariffs only took effect in the first week of April. The next month and the second quarter of 2025 will be critical to watch, meaning this could be the last import surge we see for a while.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
Tariff Fears Drive 14% Spike in U.S. Trade Deficit Ahead of April ‘Liberation Day’
Importers continued to front-run the April ‘Liberation Day’ tariffs in March, sending the overall trade deficit up 14% over February numbers to $140.5 billion for the month, according to the Bureau of Economic Analysis (BEA) on Tuesday. These figures blow away the recent three-month averages driven by companies trying to get out ahead of tariffs that range from a low 10%, to as high as 145% for Chinese goods. The new tariffs took effect in the first week of April, meaning this could be the last import surge we see for a while.
Jeff Ferry, Chief Economist Emeritus at the Coalition for a Prosperous America (CPA), said, “I think the point in these numbers today is that the high imports we have seen between January and March should soon lead to lower imports over the rest of the year.”
For the first quarter of 2025, the goods and services trade deficit totaled $394.3 billion—about $190 billion higher than during the same period in both 2024 and 2023. The goods trade deficit alone reached $466.3 billion during the first quarter of this year.
The European Union was the top contributor to the U.S. goods deficit in March, totaling $48.3 billion—nearly double the U.S.-China deficit of $24.8 billion, and the U.S.-Mexico deficit of $16.8 billion.
Ireland was the biggest surprise in the March data, with the U.S. goods deficit with Ireland rising by $15.3 billion to $29.3 billion—surpassing the deficits with both China and Mexico. Much of the widening deficit with Ireland and the broader EU is likely driven by pharmaceutical imports. Of all product categories tracked by the BEA, pharmaceuticals saw the most significant month-over-month increase. Imports of pharmaceuticals hit $50.4 billion in March, up sharply from $29.4 billion in February.
The U.S. remains heavily dependent on foreign drug supplies. While pharmaceuticals were excluded from the “Liberation Day” tariffs, they may still be targeted in a future Section 232 investigation focused specifically on national security risks. CPA today praised President Trump’s signing of an unprecedented Executive Order aimed at reshoring domestic production of critical pharmaceuticals. The order, titled “Regulatory Relief to Promote Domestic Production of Critical Medicines,” marks a significant step toward ending America’s dangerous dependence on foreign-made generic drugs and strengthening U.S. economic and national security.
Pharmaceuticals were the clear outlier in import growth. Other tariff-eligible items—such as automobiles and auto parts—showed minimal signs of front-running behavior. March passenger car imports totaled $19.2 billion, up slightly from $17 billion in February. Imports of car parts and accessories came in at $12 billion in March, versus $11.9 billion the previous month.
Top 5 Deficit Items
The top deficit items for the U.S. remained firm, with gaps widening in March.
Product
Imports
Exports
Deficit
Pharmaceuticals
$50.42 billion
$9.22 billion
$41.2 billion
Finished metal*
$21.33 billion
$2.24 billion
$19.09 billion
Cars
$19.2 billion
$5.61 billion
$13.59 billion
Computers
$13.57 billion
$2.53 billion
$11.04 billion
Cell phones
$11.8 billion
$2.8 billion
$9 billion
Of the top five deficit categories, pharmaceutical imports were the standout, jumping significantly month-over-month. The finished metals category—covering goods made of steel, aluminum, and copper—actually saw a slight decline. While some of that could reflect tariff front-running, the U.S. typically runs a high and steady deficit in finished metals, comparable to gaps seen in autos and computers. Steel and aluminum remain subject to global Section 232 tariffs.
The true impact of the new tariff regime on import volumes will likely become clearer by summer. Tuesday’s figures were largely expected, given the rollout of global tariffs in early April. However, next month’s trade report could still show some residual increases, particularly from countries hit with the baseline 10% tariff, or coming from Southeast Asia, where the Trump administration eliminated the “reciprocal tariffs” that had been set much higher. Importers may interpret that change as a green light to resume sourcing from the region.
A Note on the Services Trade and Advanced Technologies
Wall Street remains the United States’ top services export. In March, financial services exports totaled $17.1 billion—meaning foreign investors were buying U.S. securities, either because their own capital markets are shallow and offer meager yields, or because they’re flush with dollars from selling goods to the U.S. and thus reinvested in American assets.
While headlines in recent weeks warned of a decline in foreign tourism to the U.S., travel still ranked as the second-largest services export for March at $16.98 billion, down from $18.2 billion in February, and $18.7 billion in January. Even so, travel exports for the first quarter of 2025 are outperforming the same period in both 2024 and 2023.
Charges for the use of intellectual property ranked third at $13.4 billion in March, totaling $40.18 billion for the first quarter. This category includes revenue from software-as-a-service (SaaS) subscriptions and payments by foreign consumers for U.S. streaming platforms such as Disney+.
The advanced technology trade deficit surged to $57.4 billion in March, up sharply from $31.9 billion in February. Once again, the deficit was led by biotechnology—driven in part by imports of advanced laboratory equipment used in R&D, and by complex, synthetic medical devices such as artificial limbs.
Outside of defense-related manufacturing, the only advanced technology category in which the U.S. maintains a trade surplus lies with aerospace. That includes high-value goods like jet engines and space-grade hardware protected by export control laws.
What we can Expect to Come Next
Again, while importers continued to front-run the April ‘Liberation Day’ tariffs in March, sending the overall trade deficit up for the month, it is important to remember that the new tariffs only took effect in the first week of April. The next month and the second quarter of 2025 will be critical to watch, meaning this could be the last import surge we see for a while.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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