(NEW YORK) — The U.S. trade deficit narrowed significantly in April as President Donald Trump sharply escalated tariffs before pausing a large swath of the levies, U.S. Commerce Department data on Thursday showed.
Trump touted the tariffs as an effort to slash the nation’s trade deficit, which the president has said he considers a threat to the nation’s economic prosperity. Many economists disagree, however, saying the trade deficit reflects the consumer-driven engine of the U.S. economy.
The trade gap fell by more than half in April as imports plunged, the data showed. The U.S. registered a trade deficit of about $61 billion in April, marking a sharp decline from a $140 billion trade gap a month earlier.
Imports dropped by 16% in April as some trade barriers took effect, the data showed. Imports had ticked upward a month earlier as some firms rushed to stockpile supply before the levies saddled them with additional costs.
The nation’s trade gap stands well below the $131 billion deficit recorded in January, the month Trump took office.
The outlook is murky for the Trump’s tariff policy and the wider economy.
Trump’s on-again, off-again approach to tariffs leaves in doubt their ultimate level. A pair of court rulings last week thrust Trump’s steepest tariffs into limbo, adding another layer of uncertainty as federal appeals court judges determine whether a significant number of the policies pass legal muster.
The uncertain policy environment facing businesses has coincided with an anxious moment for consumers. Consumer attitudes have soured for four consecutive months as tariffs have taken hold, according to a survey conducted by the University of Michigan.
Consumer spending, which accounts for about two-thirds of U.S. economic activity, could weaken if shopper appetites diminish and import prices rise.
So far, key measures of the economy have largely defied fears of a downturn. The unemployment rate stands at a historically low level and job growth remains robust, though it has slowed from previous highs. In recent months, inflation has cooled, reaching its lowest level since 2021.
The Organization for Economic Co-operation and Development, or OECD, forecast on Tuesday continued growth for the U.S. economy in 2025 and 2026, albeit at a slower pace than last year. Additionally, recession forecasts on Wall Street faded in recent weeks after Trump rolled back some tariffs.
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