The U.S. trade deficit in goods and services narrowed sharply in April, falling to $61.6 billion from $138.3 billion in March—the largest monthly improvement on record—driven by a steep drop in imports and continued strength in American exports.

The 16.3 percent decline in imports, the biggest on record, coincided with the introduction of new U.S. tariff schedules and followed months of accelerated purchasing by companies anticipating higher duties. Analysts noted that much of the shift reflected a hangover after months of elevated imports as businesses rushed to bring in goods ahead of the tariff hikes.

At the same time, exports rose by 3.0 percent, including gains in capital goods, industrial materials, and nonmonetary gold. Services exports also increased, led by travel and financial services, expanding the nation’s longstanding surplus in services trade to $25.8 billion.

The rise in exports suggests that fears of foreign retaliation against U.S. tariffs have been overstated. The world has not reacted to the new U.S. trade policies by refusing to buy U.S. goods and services. The April data does not look like a trade war so much as a rebalancing.

The improvement in net exports comes after trade was a drag on growth in the first quarter and is now expected to make a significant positive contribution to second-quarter GDP. Economists suggest the reversal reflects both changing global trade dynamics and the effects of policies designed to bolster domestic industry and reduce dependence on imports.

Imports declined across nearly all major categories, including consumer goods, pharmaceuticals, and automotive products. The U.S. goods trade deficit with Ireland—a major source of pharmaceutical inputs—shrank from $29.3 billion to $9.5 billion, while the deficit with China fell to $19.7 billion. Shortfalls with Mexico and Canada also narrowed.

Some companies may be adjusting their sourcing strategies, while others await the outcome of ongoing negotiations. The administration has indicated that it is pursuing new trade agreements in parallel with its tariff policy, which has emphasized reciprocity and the restoration of industrial capacity in strategic sectors.

Early indicators suggest the trend may be continuing. A manufacturing survey from the Institute for Supply Management showed the steepest contraction in imports since 2009, pointing to a sustained reshaping of trade flows.

While critics have warned that tariffs risk disrupting global commerce, the latest data suggest the U.S. economy is adapting quickly—exporting more, importing less, and building a more resilient foundation for growth.