The U.S. trade deficit narrowed sharply in April as imports fell, suggesting trade may have contributed to economic growth this quarter for the first time in two years.
The U.S. Commerce Department said on Tuesday (7th) that the trade deficit fell by $20.6 billion, or 19.1 percent, to $87.1 billion in April. Imports of goods and services fell 3.4% to $339.7 billion, while exports rose 3.5% to $252.6 billion.
The record trade deficit in the first quarter reduced gross domestic product (GDP) by 3.23 percentage points, causing GDP to shrink by 1.5% following growing at a robust 6.9% in the fourth quarter of last year. Trade has contracted GDP growth for seven straight quarters.
In addition, the U.S. dollar-denominated trade deficit narrowed by a record high in April, also reflecting a drop in the value of imports as exports climbed in China due to the coronavirus lockdown.
The deficit with China fell by $8.5 billion in April, the largest in seven years. Imports fell by $10.1 billion, the biggest drop since 2015.
U.S. merchandise imports plunged 4.4% from a record level in March, the biggest drop since April 2020, reflecting lower inbound shipments of consumer goods, industrial supplies, capital goods and automobiles.
Adjusted for inflation, the merchandise trade deficit narrowed 14.2% to $116.2 billion in April.
