The U.S. trade deficit for goods widened sharply in January, a result of a record surge of products imported into the country, the Commerce Department said on Friday.
Why it matters: For yet another month, manufacturers and businesses raced to bring goods into the country to get ahead of potential tariffs implemented by President Trump.
- The data, which are preliminary, confirms anecdotes of “front loading” from port officials and retailers since Trump won the election.
- The strong import data helped flip a closely-watched first quarter estimate of GDP negative, stoking further fears about the health of the economy. Imports act as a drag on GDP.
By the numbers: The trade gap in goods was a record $153 billion — widening by 26% in January alone as imports surged well ahead of exports, the Commerce Department said.
- That shatters the most recent goods trade gap record of $122 billion set the previous month.
- Exports of goods for January were $172 billion, $3.3 billion more than December. Goods imports, meanwhile, were $325 billion, an increase of $35 billion from December.
The intrigue: For context, there are more goods imports relative to that of exports now than in March 2022, when importers were aiming to get ahead of any disruptions from Russia’s invasion of Ukraine.
- This time the hurdle is tariffs, which Trump telegraphed would be ramping up in the early days of his administration.
- A 10% tariff on goods from China went into effect in early February with an additional 10% levy set to take effect next week. The White House says it will also move forward with 25% tariffs on goods from Canada and Mexico.
- The Commerce Department’s preliminary release does not break out the data by country.
The bottom line: The record trade deficit “adds to the building growth concerns for the economy in early 2025,” Nationwide economist Ben Ayers wrote in a client note.