U.S. Trade Deficit Widens to Record $109.8 Billion as Imports Surge

A sharp increase in U.S. imports in the first quarter was a big factor behind a 1.4% drop in U.S. gross domestic product.

Economists surveyed by The Wall Street Journal had expected a trade deficit of $106.7 billion for March.

“It’s consumer demand, it’s trying to get inventories back with supply chains having been so disrupted,” said

Joshua Shapiro,

chief U.S. economist at Maria Fiorini Ramirez Inc. on the deficit trend. Even though exports have been pretty solid, “they’ve been swamped by the import rise,” he said.

The pickup in imports of industrial supplies, consumer goods and vehicles was particularly sharp, likely reflecting price increases that have contributed to high U.S. inflation.

The conflict in Ukraine also intensified in March, sending petroleum prices higher and U.S. gasoline costs to a record. The Biden administration banned Russian oil imports on March 8. March petroleum imports were the highest since December 2014, adjusted for seasonality.

Economists expect demand for imports to remain high in the near term. “Hearty demand for imports will likely persist in the early part of [the second quarter], while a weaker consumer backdrop abroad will constrain export growth,”

Mahir Rasheed,

U.S. economist at Oxford Economics, said in a note Wednesday.

A factor contributing to the increase in exports was increased travel to the U.S., which is considered an export of service, as Covid-19 restrictions further eased with case numbers declining.

The widening trade deficit reflects pandemic-related supply-chain constraints—which have helped push up the rate of U.S. inflation to multidecade highs. Both exports and imports have been growing rapidly after initially collapsing in the early days of the pandemic, which closed factories and businesses around the world.

Trade has been volatile over the past year, as companies have struggled with shipping backlogs, product scarcity, order cancellations and delays. Strict lockdowns in China related to an increase in Covid-19 cases are also denting trade activity this spring.

—Anthony DeBarros contributed to this article.

Write to Harriet Torry at [email protected]