When President Donald Trump threatened to hike tariffs on all U.S. trading partners at the start of the year, a rush of foreign goods flooded into the country as businesses scrambled to stockpile inventory ahead of higher costs.
- USO ETF’s momentum accelerates. Track it now here.
That front-loading behavior distorted economic data, with the U.S. economy shrinking 0.5% in the first quarter—the worst performance in three years. Trump’s aggressive tariff rhetoric initially seemed to backfire, fueling concerns it was doing more harm than good.
In fact, the record $390 billion trade deficit logged in the first quarter of 2025 was largely a byproduct of the very habit tariffs were meant to discourage: over-reliance on foreign goods.
Each of the first three months of the year posted the worst monthly trade gaps on record.
Now, the script has flipped.
With tariffs taking effect after April 2 Liberation Day, imports are falling quickly—and the U.S. trade deficit is shrinking much faster than most economists projected.
Trump is treating it as a first victory lap—framing his aggressive tariff strategy not merely as …