Imports of goods into the U.S. dropped a record 19.8% in April, according to estimates released by the U.S. Commerce Department on Friday. That drop is in sharp contrast to a 5.7% uptick of goods imported in March, widely believed to be driven by U.S. retailers and consumers buying in advance of President Donald Trump’s tariff threats, which are expected to cause prices to soar.
The new estimates show that America’s trade deficit with the rest of the world narrowed by 46% to $87.6 billion, according to Marketwatch, much lower than the $143 billion projected by economists. And that should make President Trump very happy, since he’s obsessed with the trade deficit. But that’s not how any mainstream economist values the health of the U.S. economy.
As countless economists have pointed out, the average consumer has a trade deficit with their barber or their local grocery store, but that doesn’t mean your barber is stealing from you, as Trump has characterized global trade relations. It just means that you’ve purchased something and, presumably, you’re better for it.
President Trump first announced incredibly high tariffs on April 2, which he dubbed “Liberation Day,” including a 10% universal tariffs across the board on all goods coming into the country. Trump’s tariffs on goods coming from China soared to 145% at one point, but that was reduced to about 30% on most goods recently after the president and negotiators from China agreed to a framework for negotiations to continue. But Trump reversed his position again on Friday, accusing China of violating the agreement without providing evidence.
“Two weeks ago China was in grave economic danger!” Trump wrote on Truth Social Friday morning. “The very high Tariffs I set made it virtually impossible for China to TRADE into the United States marketplace which is, by far, number one in the World. We went, in effect, COLD TURKEY with China, and it was devastating for them.”
Trump went on to claim that “many factories” had been closed and there was “civil unrest” in China over the trade war, neither of which is true. But Trump insisted he made a deal to help China in this situation.
“I saw what was happening and didn’t like it, for them, not for us. I made a FAST DEAL with China in order to save them from what I thought was going to be a very bad situation, and I didn’t want to see that happen,” Trump wrote. “Because of this deal, everything quickly stabilized and China got back to business as usual. Everybody was happy! That is the good news!!! The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY!”
Again, Trump did not explain how China had supposedly violated the deal. But U.S. Trade Representative Jamieson Greer told the Wall Street Journal on Friday the administration believes China has been “reluctant” to approve exports of rare-earth materials.
The president’s tariffs have not only changed based on how he’s feeling on any given day—they’re also currently being litigated. On Wednesday, the Court of International Trade ruled that Trump’s tariffs were invalid because only Congress has the power under the U.S. Constitution to impose tariffs. Trump argues that he has emergency powers to enact tariffs, and on Thursday an appeals court ruled the tariffs could remain while the case is heard.
Trump is also trying to get his budget bill passed through the Senate, with a very ambitious goal of having it signed on July 4. But the bill, which has already passed the House, includes a $800 million cut to Medicaid and would be a handout to the wealthy, as most analysts believe. The Senate is also resistant to raising the SALT deduction, which occurred at the last minute in the House bill thanks to blue state Republicans who don’t like that constituents in higher tax states like California and New York aren’t allowed to write off more of their state and local taxes on their federal returns.
The bill will also add to the federal deficit, but the White House insists the economic “growth” that will be unleashed by the bill will pay for itself in that regard. Trump whined about the nonpartisan Congressional Budget Office on Friday, claiming it was “controlled” by the Democrats and that its assessment of the bill didn’t account for all this promised growth.
“The information they recently released is even more absurd and indefensible,” Trump wrote about the CBO estimates on Truth Social. “I predict we will do 3, 4, or even 5 times the amount they purposefully ‘allotted’ to us (1.8%) and, with just our minimum expected 3% Growth, we will more than offset our Tax Cuts (which will, in actuality, cost us no money!).”
Wall Street has come up with a new acronym this week called TACO (“Trump Always Chickens Out”) a reference to the president’s habit of making wild threats about tariffs and ultimately scaling them way back. Trump was asked about TACO at a press conference this week, and it clearly got under his skin. “Don’t ever say what you said,” Trump said to the reporter. “That’s a nasty question.”
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