Import decline hits record high, US trade deficit narrows by more than 50% in April.

With most American companies abruptly halting the "shipping frenzy" before higher-scale retaliatory tariffs went into effect, the U.S. trade deficit in April saw the largest narrowing in the country's statistical history. Data released by the U.S. Department of Commerce on Thursday showed that the U.S. goods and services trade deficit in April plummeted by a staggering 55.5% compared to the previous month, dropping to just $61.6 billion, marking the lowest trade deficit level since 2023, and completely reversing the sharp expansion in the first quarter. The narrowing of the trade deficit exceeded the economists' previous estimate of $66 billion. In April, U.S. imports plummeted by 16.3% from the previous month, achieving a record decline in import trade data; exports, on the other hand, unexpectedly grew by 3%. The drastic narrowing of trade data in April indicates that, following a 0.2 percentage point decline in the annualized U.S. gross domestic product (GDP) in the first quarter due to the dragging trade data, trade data is expected to make a significant positive contribution to the U.S. GDP in the second quarter, although the inventory accumulation from the previous "shipping frenzy" may not be favorable for GDP growth. The sharp increase in retaliation tariffs that came into effect at the beginning of the month caused a record-breaking sudden brake in the influx of overseas goods, explaining the steep drop in import volume. However, how much of a boost net exports will provide to the U.S. GDP data for the period of April to June remains to be seen, as President Donald Trump subsequently significantly reduced or postponed most of the aggressive retaliatory tariffs, but sharply raised the tariffs on specific industrial products such as steel and aluminum; the U.S. government also stated that it is negotiating new trade agreements with several major trading partners, including the European Union and China. Stuart Paul, an economist from Bloomberg Economics, stated in a commentary report: "The shrinking of the trade deficit in the second quarter will boost the U.S. GDP, but the overall inventory consumption of imported goods on a large scale prior to this may weaken the positive effect of the trade factors." An independent data report showed that in the week ending May 31, the number of initial unemployment claims unexpectedly surged by over 8,000 to 247,000 people in the U.S., reaching the highest level since October of last year, further confirming significant signs of cooling in the labor market that is crucial for U.S. economic growth due to the heavy pressure of tariffs. Specifically, in April, the import volume of consumer goods in the U.S. plummeted by $33 billion, with a significant decrease in pharmaceutical imports being the main reason; the import volume of large industrial goods, automobiles, and essential capital equipment also synchronously plummeted. Among them, the significant reduction in pharmaceutical imports caused the U.S. trade deficit in goods with Ireland to plummet from a seasonally adjusted $29.3 billion to just $9.5 billion. At the same time, the U.S. trade deficit in goods with China narrowed to $19.7 billion, with imports from China dropping to the lowest level since the early stages of the pandemic. Asia is arguably the core target region of the Trump administration's tariff policy. The Trump administration seeks to achieve fairness in bilateral trade in the region, promote more Asian giants to invest in the U.S., strengthen domestic manufacturing and recovery, and enhance national industrial security. Trump also views tariffs as a means to increase government revenue, attempting to alleviate the continuously rising budget deficit of the U.S. government. For the Trump administration, a growing deficit will cause a significant increase in the yield of 10-year U.S. Treasury bonds, which serves as the "anchor of global asset pricing," thereby severely restricting Trump's ambitions for domestic tax cuts and a larger-scale fiscal budget blueprint. The U.S. trade deficit in goods with Canada and Mexico also narrowed. The trade balance with Switzerland shifted from a deficit of $15.4 billion in March to a surplus of just $3.5 billion in April, primarily reflecting a significant reduction in the export of gold from Switzerland to the U.S. Adjusted for inflation, the U.S. goods trade deficit narrowed to $85.6 billion in April, marking the lowest goods trade deficit since the end of 2023. Survey data from the Institute for Supply Management (ISM) indicated that the U.S. trade deficit in May is likely to continue to shrink, with the May subindex for U.S. manufacturing imports showing the most significant contraction since 2009.