Photo by Ryan
Sorry, this is not an Elon Musk ketamine joke. I was just noting a peculiarity in the trade data reported this morning. There was a reported drop of $76.7 billion in the size of the trade deficit from March to April.
Before anyone starts celebrating the victory for Trump’s tariffs, it’s worth noting a couple of points. First, the trade deficit had exploded in March to $138.3 billion, the highest in many years. (It had averaged less than $80 billion a month in 2024.) People were quite reasonably looking to import goods and materials in advance of the tariffs that everyone knew were coming.
Once all these items were imported and stockpiled, there was less reason to import things in April. And the tariffs did actually come, so everything people might want to import cost more, which is another reason for importing less.
But this story is seen most clearly in the case of prescription drugs. In February, the value of pharmaceutical imports was $29,498 million. This rose to $50,156 million in March. It then fell back to $24,179 in April. This drop accounted for $25,978 million of the decline in the trade deficit or more than one-third of the total drop.
This should not be a surprise; Trump has promised big tariffs on drugs. However, these wild swings do point to the irrationality and waste associated with Trump’s trade policies. Rushing to increase shipments and then stockpiling them, and then letting shipping capacity sit idle, is not a clever way to run a business or an economy.
It would probably help if we had someone who knew something about business calling the shots instead of a reality TV show star.
This first appeared on Dean Baker’s Beat the Press blog.
