Breitbart Business Digest: Trade Data Shows Trump’s Tariffs Are Working

Trump’s Hidden Trade Deficit Revolution

The best kept secret in American politics and economics right now is that President Trump’s tariffs are working to reduce the trade deficit.

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.

Normalizing for the AI Capital Goods Surge

This year has also witnessed a historic surge in AI infrastructure imports — semiconductors, computers, telecommunications equipment, and computer accessories — as American companies race to build out data center capacity at a pace the world has never seen. Those four categories imported $77.5 billion in April alone, up from $31.2 billion in April 2024 (ignoring the distorted 2025 figures), an increase of $46.3 billion or 148 percent. Year-to-date, the same four subsectors have imported $284.4 billion, versus $114.9 billion in the same period of 2024, a $169.5 billion increase.

If we reset both distortions to their respective baselines — normalizing the petroleum surplus from $17.7 billion back to $4.3 billion, its level before the Iran conflict drove crude above $100 per barrel, and normalizing AI capital goods imports from $77.5 billion back to $31.2 billion, their April 2024 level before the data center buildout surge — the April 2026 deficit on a comparable basis is approximately $23 billion.

Here’s how we get to that figure. Start with the actual $55.9 billion deficit, add back $13.4 billion for the petroleum war premium, subtract $46.3 billion for the AI import normalization, and you arrive at $23 billion. Against April 2024’s actual deficit of $70.9 billion, that represents an underlying improvement of roughly $48 billion, or 67 percent. Year-to-date, applying the same methodology — normalizing petroleum against the first four months of 2025 and AI capital goods against the same period of 2024 — the normalized 2026 deficit runs approximately $72 billion, versus the actual 2024 year-to-date deficit of $260 billion, an improvement of $188 billion.

It is worth noting that even this normalization is probably incomplete. The AI buildout began accelerating in late 2022, meaning April 2024 AI imports were already elevated above a true pre-surge baseline. Using 2024 as the benchmark understates the distortion, which means the underlying improvement is likely larger than these numbers suggest, not smaller.

The point here is not to say we should ignore AI-related imports. The surge highlights how dangerously import-dependent we remain. And there’s no sign that this is transitory, at least in the near term. But if you are going to see how tariffs have changed trade, you need to look past the AI surge.

Where Tariffs Are Actually Working

The clearest signal in the data is consumer goods. Consumer goods imports fell from $66.7 billion in April 2024 to $56.3 billion in April 2026, a decline of $10.4 billion, or 15.6 percent. Year-to-date, consumer goods imports are running $218.5 billion against $255.6 billion through April 2024, down $37.1 billion, or 14.5 percent. This happened while consumer spending continued to grow, which means it cannot be explained by general demand weakness. It is compositional — imports in the categories most directly exposed to tariff policy have contracted meaningfully while other categories surged.

The subcategory breakdown tells a consistent story across the classic China-exposed consumer durables. Furniture imports fell 20 percent. Cookware and tools fell 21 percent. Jewelry fell 12 percent. Televisions and video equipment fell 14 percent. Household appliances fell nine percent. Cotton apparel fell eight percent. Toys and sporting goods fell four percent. Smartphones, largely exempt from the Liberation Day tariffs, are essentially flat, which is itself informative: consumer demand is not the constraint, and tariff-free phone imports did not decline. Supply chain reorientation away from tariffed sources is doing the work.

The counterfactual is stark. Had consumer goods imports remained at their April 2024 pace — before tariffs began reshaping import patterns — the April 2026 trade deficit would have been approximately $66.3 billion rather than $55.9 billion. Year-to-date, the deficit without the consumer goods decline would be running at roughly $259 billion, virtually identical to the actual 2024 year-to-date deficit of $260.0 billion. In other words, tariffs have coincided with a huge drop in consumer imports.

The Right Baseline Is a Trend, Not a Level

The most important context the deficit numbers are missing is where the trajectory was headed. The trade deficit was not stable in 2023 and 2024. It was widening rapidly. The full-year 2023 deficit was $749.6 billion. By 2024, it had widened to $885.5 billion — a deterioration of $135.9 billion, or 18.1 percent, in a single year. Monthly deficits were accelerating through 2024, hitting $77.0 billion in July, $83.3 billion in September, and $96.8 billion in December. That was the highest monthly reading since the post-COVID distortion period. The trajectory pointed toward a 2025 deficit approaching or exceeding $1 trillion.

The consumer goods trend was particularly alarming. Monthly consumer goods imports ran $61.4 billion in January 2024, $63.0 billion in February, $64.5 billion in March, and $66.7 billion in April — accelerating with each passing month. By April 2026, they are at $56.3 billion and declining. That is not merely a lower level. It is a decisive reversal of a deteriorating trend in the category that tariffs were specifically designed to address.

That trend has been decisively broken across the board. Monthly deficits in 2026 have ranged from $54.2 billion to $56.6 billion, roughly $30 to $40 billion below where the 2024 monthly trend was pointing by year-end. Imports of consumer goods and non-petroleum, non-AI goods are not merely growing more slowly. They are contracting in absolute terms.

Tariffs arrested a rapidly deteriorating trade position and reversed it in consumer goods. Absent the tariffs, the deficit would be much higher.

Tariffs work.