The U.S. trade deficit widened in March. That might be good news

In the midst of a tumultuous world economy — spurred by war, soaring energy prices, blocked supply chains, and tariffs — the U.S. trade deficit rose modestly in March, up 4.4% to $60.3 billion.

The deficit is the difference between the value of imports and exports. The good news is that both imports and exports increased, though imports increased more — hence the rise in the deficit. But even with that modest uptick, the deficit is down by 55% year-to-date compared to the same period last year.

Narrowing the trade deficit has been a major goal of the Trump administration’s tariff and trade policies. But there’s a lot more than tariffs driving those trade numbers.

Thomas Ryan, economist with Capital Economics, said a 4.5% monthly increase in the U.S. international trade deficit is interesting, despite not appearing to be on the surface.

“This was the first month you saw the impact of higher energy prices as a result of the Iran war,” Ryan said.

Remember — the U.S. is now the planet’s top petroleum producer. Gary Schlossberg, a global strategist at the Wells Fargo Investment Institute, said the value of U.S. fuel exports rose nearly 25% in March. Other exports are also getting a boost.

“The U.S. is the supplier of last resort,” Schlossberg said. “We’re an (agriculture) producer, and ag trade has been disrupted. Ag exports were up 8%. And then defense equipment was another area of strength.”

Still, the trade deficit did widen a bit in March. And that’s because while exports rose, imports rose even more — driven by demand for computer equipment to run AI data centers, alongside passenger vehicles and other consumer products. Nationwide financial market economist Oren Klachkin said that’s good news.

“It shows that consumers continue to spend, businesses continue to dole out capital,” he said.

The trade deficit is likely to hold pretty steady in the coming months, predicted Mary Lovely, senior fellow at the Peterson Institute for International Economics. Tariffs aren’t causing wild swings in import flows like they did last year, and U.S. demand for imports remains strong.

“So the deficit overall is not going away. It’s moving,” Lovely said.

China, which was the top exporter to the U.S., has fallen to fourth behind Taiwan, which supplies the U.S. with AI equipment. It’s also behind Vietnam and Mexico, where companies are moving more production to supply the U.S. market.