Trump’s Hidden Trade Deficit Revolution

The goods and services trade deficit narrowed slightly by 1.2 percent to $55.9 billion in April, down from a revised $56.6 billion in March, as exports rose 2.6 percent to a record $327.1 billion and imports climbed 2.0 percent to $383.0 billion. The trade deficit is down about 7.3 percent from a year ago.

But those figures conceal some almost geological shifts that have been occurring in global trade. First, there is the global oil shortage that has inflated U.S. exports. Second, we’ve seen a massive acceleration of the artificial intelligence buildout that has led to a surge of tech imports. Third,  and perhaps even more important for assessing the effectiveness of the tariff, there’s been a very large decline in consumer goods imports.

Let’s start with the petroleum export windfall driven by the Iran war and the effective closure of the Strait of Hormuz, which has pushed crude above $100 per barrel and inflated the export side of the ledger. The U.S. petroleum trade surplus swelled to a record $17.7 billion in April, up from $4.3 billion in April 2025 — before crude oil prices escalated above $100 per barrel after the latest Persian Gulf war got going. That $13.4 billion swing is mostly war-driven — higher prices and higher volumes as American producers fill the supply gap left by Hormuz disruptions. Now, Trump’s policies deserve some credit here.  Our capacity to increase exports is partly driven by the change in direction of America’s energy policy under Trump, both in his current term and his first. But it has nothing to do with trade policy.

Strip out petroleum, and the deficit comes in at $258.3 billion year-to-date against $451.7 billion in the first four months of last year. At first glance, that looks like a vast improvement.  But that comparison is severely distorted by the tariff front-running. We shouldn’t credit tariffs with a reduction from an import level that the threat of tariffs elevated. A better comparison is with 2024, when the January through April trade deficit came in at $277.2 billion through April 2024, a genuine $18.9 billion improvement, but far from the dramatic rebalancing the year-over-year number would suggest.