| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Balance | $-136.3B | $-145.0B to $-109.5B | $-140.5B | $-122.7B | $-123.2B |
Highlights
The deficit in the international trade balance in goods and services is $140.5 billion in March, wider than the consensus deficit of $136.3 billion in the Econoday survey of forecasters. The deficit for February is smaller than previously reported at $123.2 billion. Overall, the trade deficit for the first quarter 2025 means that net exports will remain a large negative contributor to growth when the second estimate of first quarter GDP is released at 8:30 ET on Thursday, May 29.
The trade balance for goods-only is a deficit of $163.5 billion in March, up 11.2 percent from February. The trade balance for services-only is a surplus of $23.0 billion in March, down 3.5 percent from February.
Total exports of goods and services are up 0.2 percent in March from February to $278.5 billion. Exports of goods are up 0.7 percent in March from the prior month to $183.2 billion. There is an increase of $2.2 billion in industrial supplies and materials which includes an increase of $0.7 billion in nonmonetary gold. Automotive exports are up $1.2 billion. Capital goods are down $1.5 billion with a drop of $1.8 billion in civilian aircraft. Exports of services are down 0.9 percent in March from the prior month to $95.2 billion. Travel exports are down $1.3 billion, while transport is up $0.3 billion and financial services up $0.2 billion.
Total imports of goods and services are up 4.4 percent in March from February to $419.0 billion. Imports of goods are up 5.4 percent in March from the prior month to $346.8 billion. Goods imports are up $22.5 billion for consumer goods, up $3.7 billion for capital goods, and up $2.6 billion for automotive. However, imports of industrial supplies declined $10.7 billion. Imports of services are down 0.1 percent in March from the prior month to $72.2 billion. Travel services imports are down $0.4 billion while transport services are up $0.4 billion.
The trade deficit with China narrows in March to $24.804 billion from $26.586 billion in February. The trade deficit with Canada shrinks to $4.889 billion in March from $7.375 billion in February. The trade deficit with Mexico is little changed at $16.769 billion from $16.770 in the prior month. The trade surplus with the UK is down to $1.173 billion in March from $3.365 billion in February.
There is an unusual widening in the deficit with Ireland to $29.325 billion in March from $13.994 billion in February. In March, exports are up $0.1 billion to $1.4 billion, while imports rise by $15.5 billion to $30.7 billion. The reason isn't entirely clear, but Ireland is a major supplier of pharmaceuticals to the US. March imports of pharmaceuticals rose to $50.422 from $29.498 in the prior month. Businesses may be stocking up on drugs before tariffs increase prices and/or disrupt supply chains.
Another factor that has widened the trade deficit is imports of nonmonetary gold. In March, imports decline to $0.741 billion. However, for the year-to-date, imports of nonmonetary gold are at $7.079 billion compared to $2.561 billion in the same period last year. Exports of nonmonetary gold are also higher, but less dramatically. In March, nonmonetary gold exports are $5.576 billion from $4.880 billion in February. These are at $12.120 billion for 2025 to date compared to $10.658 billion for the first three months of 2024.
The trade balance for goods-only is a deficit of $163.5 billion in March, up 11.2 percent from February. The trade balance for services-only is a surplus of $23.0 billion in March, down 3.5 percent from February.
Total exports of goods and services are up 0.2 percent in March from February to $278.5 billion. Exports of goods are up 0.7 percent in March from the prior month to $183.2 billion. There is an increase of $2.2 billion in industrial supplies and materials which includes an increase of $0.7 billion in nonmonetary gold. Automotive exports are up $1.2 billion. Capital goods are down $1.5 billion with a drop of $1.8 billion in civilian aircraft. Exports of services are down 0.9 percent in March from the prior month to $95.2 billion. Travel exports are down $1.3 billion, while transport is up $0.3 billion and financial services up $0.2 billion.
Total imports of goods and services are up 4.4 percent in March from February to $419.0 billion. Imports of goods are up 5.4 percent in March from the prior month to $346.8 billion. Goods imports are up $22.5 billion for consumer goods, up $3.7 billion for capital goods, and up $2.6 billion for automotive. However, imports of industrial supplies declined $10.7 billion. Imports of services are down 0.1 percent in March from the prior month to $72.2 billion. Travel services imports are down $0.4 billion while transport services are up $0.4 billion.
The trade deficit with China narrows in March to $24.804 billion from $26.586 billion in February. The trade deficit with Canada shrinks to $4.889 billion in March from $7.375 billion in February. The trade deficit with Mexico is little changed at $16.769 billion from $16.770 in the prior month. The trade surplus with the UK is down to $1.173 billion in March from $3.365 billion in February.
There is an unusual widening in the deficit with Ireland to $29.325 billion in March from $13.994 billion in February. In March, exports are up $0.1 billion to $1.4 billion, while imports rise by $15.5 billion to $30.7 billion. The reason isn't entirely clear, but Ireland is a major supplier of pharmaceuticals to the US. March imports of pharmaceuticals rose to $50.422 from $29.498 in the prior month. Businesses may be stocking up on drugs before tariffs increase prices and/or disrupt supply chains.
Another factor that has widened the trade deficit is imports of nonmonetary gold. In March, imports decline to $0.741 billion. However, for the year-to-date, imports of nonmonetary gold are at $7.079 billion compared to $2.561 billion in the same period last year. Exports of nonmonetary gold are also higher, but less dramatically. In March, nonmonetary gold exports are $5.576 billion from $4.880 billion in February. These are at $12.120 billion for 2025 to date compared to $10.658 billion for the first three months of 2024.
Market Consensus Before Announcement
With the goods trade deficit surging 10 percent on the month to an enormous $162 billion in March on tariff front-running, the consensus for the goods and services gap looks for a widening to $136.3 billion in March from $122.7 billion in February.
Definition
Updating the goods portion of the advance report and offering initial data on services, this report provides complete information on cross-border trade. Merchandise trade is available by export, import and trade balance for six principal end-use commodity categories and for more than one hundred principal commodity groupings. Data are also available for 48 countries and 7 geographic regions. Detailed information is reported on oil and motor vehicle imports. Services trade is available by export, import and trade balance for seven principal end-use categories.
Description
Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect the value of the dollar in the foreign exchange market.
Imports indicate demand for foreign goods and services here in the U.S. Exports show the demand for U.S. goods in countries overseas. The dollar can be particularly sensitive to changes in the chronic trade deficit run by the United States, since this trade imbalance creates greater demand for foreign currencies. The bond market is also sensitive to the risk of importing inflation. This report gives a breakdown of U.S. trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.
Importance
The international trade balance on goods and services is the major indicator for foreign trade. While the trade balance (deficit) is small relative to the size of the economy (although it has increased over the years), changes in the trade balance can be quite substantial relative to changes in economic output from one quarter to the next.
Interpretation
Market reaction to this report is complex. Typically, the smaller the trade deficit, the more bullish for the dollar. Also, stronger exports are bullish for corporate earnings and the stock market.
Both the level and changes in the level of international trade indicate relevant information about the trends in foreign trade. Like most economic indicators, the trade balance is subject to substantial monthly variability, especially when oil prices change. It is more appropriate to follow either three-month or 12-month moving averages of the monthly levels.
It is also useful to examine the trend growth rates for exports and imports separately because they can deviate significantly. Trends in export activity reflect both the competitive position of American industry and the strength of domestic and foreign economic activity. U.S. exports will grow when: 1) U.S. product prices are lower than foreign product prices; 2) the value of the dollar is relatively weaker than that of foreign currencies; 3) foreign economies are growing rapidly.
Imports will increase when: 1) foreign product prices are lower than prices of domestically-produced goods; 2) the value of the dollar is stronger than that of other currencies; 3) domestic demand for goods and services is robust.
The international trade report does show bilateral trade balances with our major trading partners. Since the value of the dollar versus various foreign currencies does not always move in tandem, we can see a narrower or wider trade deficit with different countries. In the 1980s and 1990s, the U.S. trade deficit with Japan often caused political problems. During the next 20 years the deficit with China began to grow rapidly and, like Japan, once again caused political problems. While American consumers benefit from weak imports, American workers often lose their jobs as these goods are no longer produced in the United States. Ideally, the United States would be exporting (high end) goods that other countries don't produce.
Imports indicate demand for foreign goods and services here in the U.S. Exports show the demand for U.S. goods in countries overseas. The dollar can be particularly sensitive to changes in the chronic trade deficit run by the United States, since this trade imbalance creates greater demand for foreign currencies. The bond market is also sensitive to the risk of importing inflation. This report gives a breakdown of U.S. trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.
Importance
The international trade balance on goods and services is the major indicator for foreign trade. While the trade balance (deficit) is small relative to the size of the economy (although it has increased over the years), changes in the trade balance can be quite substantial relative to changes in economic output from one quarter to the next.
Interpretation
Market reaction to this report is complex. Typically, the smaller the trade deficit, the more bullish for the dollar. Also, stronger exports are bullish for corporate earnings and the stock market.
Both the level and changes in the level of international trade indicate relevant information about the trends in foreign trade. Like most economic indicators, the trade balance is subject to substantial monthly variability, especially when oil prices change. It is more appropriate to follow either three-month or 12-month moving averages of the monthly levels.
It is also useful to examine the trend growth rates for exports and imports separately because they can deviate significantly. Trends in export activity reflect both the competitive position of American industry and the strength of domestic and foreign economic activity. U.S. exports will grow when: 1) U.S. product prices are lower than foreign product prices; 2) the value of the dollar is relatively weaker than that of foreign currencies; 3) foreign economies are growing rapidly.
Imports will increase when: 1) foreign product prices are lower than prices of domestically-produced goods; 2) the value of the dollar is stronger than that of other currencies; 3) domestic demand for goods and services is robust.
The international trade report does show bilateral trade balances with our major trading partners. Since the value of the dollar versus various foreign currencies does not always move in tandem, we can see a narrower or wider trade deficit with different countries. In the 1980s and 1990s, the U.S. trade deficit with Japan often caused political problems. During the next 20 years the deficit with China began to grow rapidly and, like Japan, once again caused political problems. While American consumers benefit from weak imports, American workers often lose their jobs as these goods are no longer produced in the United States. Ideally, the United States would be exporting (high end) goods that other countries don't produce.
