Under the threat of tariffs, the trade deficit of US goods has reached a historical record! There is a high probability that the GDP will suffer a heavy blow in the first quarter.

The US goods trade deficit unexpectedly expanded to a historic high in March, as businesses continued to import goods before tariffs took effect. This suggests that the first quarter economic output data in the US may be significantly hindered, with the sharp increase in monthly imports potentially being a final push by US businesses to ensure a supply of goods and materials before the tariffs take effect. Recent forecast data shows that the weakening trend in the US economy is hard to avoid, with many economists drastically lowering their GDP growth expectations for the US in 2025. Some economists even predict that the US economy will enter a recession in 2025. Data released by the US Commerce Department on Tuesday showed that the US goods trade deficit increased unexpectedly by 9.6% in March, reaching $162 billion. Since imports are accounted for as a negative item in the calculation of US Gross Domestic Product (GDP), this data suggests that the first quarter GDP figures to be released on Wednesday may be weaker than previously expected by economists and may even show negative growth. This has led many economists to lower their first quarter US GDP estimates and their 2025 US GDP forecasts after the record trade deficit data was released. Another report released on the same day showed that the Trump administration's tariff policies have significantly worsened the economic outlook and financial condition of US businesses and households. Data released by the Conference Board in April showed that US consumers' expectations for the next six months hit their lowest level since 2011. US goods trade deficit expands to record high US businesses rush to import goods to avoid tariffs The latest trade data shows that the sharp increase in imports reflects US businesses making a final push to stock up before President Donald Trump's announcement in March of tariffs on steel and aluminum, and his more extensive global tariff policy in early April. A survey of economists by Bloomberg showed that some economists quickly lowered their GDP growth expectations after the trade deficit data was released. Economists currently expect the US GDP to grow at an annualized rate of 0.3% in the first quarter, which is expected to be the slowest growth rate since early 2022. However, some economists predict that the US economy will shrink, with the latest core forecast from the Atlanta Fed's GDPNow economic model showing a 1.5% decline in US GDP in the first quarter. "This leading trade data supports our pessimistic forecast of a 1.1% contraction in US GDP," wrote Carl Weinberg, chief economist at High Frequency Economics, in a report. "There is even a risk of further downward pressure on GDP." Stephen Stanley, chief economist at Amherst Pierpont Securities in Santander, Spain, is even more pessimistic. Based on trade statistics, he lowered his forecast by one percentage point, predicting a contraction of about 2.4% in US GDP in the first quarter. However, he said that if imports in the second quarter return to normal, GDP growth "should see a strong rebound." Tariff storm sweeps across America Is the US economy in danger in 2025? Tariff policy has been the core of President Trump's efforts to revive domestic manufacturing, promote and expand exports, reduce deficits with trading partners, increase fiscal revenues, and strengthen national security strategies. The March US trade data report showed that under the push by US businesses and consumers to stock up on imported goods before the Trump tariff policy took effect in April, imports rose by an unprecedented 5% to $342.7 billion, with consumer goods reaching a record high; car and capital imports also exceeded expectations. Exports grew by 1.2%. The data shows a drop in imports of industrial goods, including metals, oil, wood, and other production materials, as well as gold bars for investment purposes. However, it is not clear whether gold bars had a significant impact on import figures, as a significant portion of the widening trade deficit at the beginning of this year was attributed to large-scale gold bar imports. Economists will pay more attention to the more comprehensive trade data to be released on May 6 to understand the changes in gold bar imports. Gold bars are classified as "manufactured metal shapes". It is worth noting that investment gold is not included in the US government's GDP calculation. Even after excluding gold, the Atlanta Fed's GDPNow forecast shows that trade data will drag down GDP by more than 4 percentage points, consistent with the phenomenon of companies stockpiling other goods and materials before the implementation of tariff policies. The US Commerce Department report also showed that wholesale inventories increased for the second consecutive month by 0.5%; retail inventories decreased by 0.1% last month, with a reduction in inventories at car dealerships. Data from the US Bureau of Labor Statistics shows that job vacancies in the US in March fell to the lowest level since September last year, reflecting a weakening demand for labor at a time of increased economic uncertainty. However, the data also shows that the overall US labor market remains robust: layoffs fell to the lowest level since June last year, and recruitment activities remained stable. The Trump administration decided to impose astonishing tariffs of up to 145% on China (one of the top three US trading partners) and at least 10% on most other countries, leading many forecasters to warn that the global economy will slow sharply in the future, with some even predicting a deep economic recession in the US this year. This is in part due to the increasing pressure of inflation faced by US households since the high inflation period of 2022, which may significantly reduce demand from households, with some households already struggling financially, and household demand or consumption accounting for approximately two-thirds of US GDP. Although the Trump administration recently implemented a 90-day deferral period for some of the most severe "reciprocal tariffs," adjusting benchmark tariffs to 10% for most countries except China during this period, according to Bloomberg Economics Research Team predictions, the current "effective tariff rate" in the US is close to 23% - the highest level in over a century. This has already caused severe shock to consumer and business confidence in the US."Il est temps de partir." "It's time to leave."The new round of global trade wars ignited by Trump's tariff policies has dimmed the prospects for economic growth in the United States and globally. Economists predict that the global trade war launched by US President Donald Trump will raise global prices, weaken consumer spending, and impact US and global economic growth this year and next. According to Bloomberg's compilation of the latest survey of economists, the US economy is expected to grow by 1.4% and 1.5% in 2025 and 2026, respectively, compared to 2% and 1.9% shown in last month's survey. The median among respondents now shows a 45% probability of the US economy entering a recession in the next 12 months, compared to 30% in the March survey. According to BCA Research, a well-known Wall Street research institution, the probability of the US economy falling into recession has exceeded 50%, while JPMorgan predicts a 60% chance of a US economic downturn.