U.S. trade deficit narrows to $55.9B as oil exports surge on Iran conflict

A surge in U.S. crude oil exports tied to the Iran conflict narrowed the trade deficit in April, even as imports of AI-related equipment hit fresh records.

The U.S. trade deficit narrowed 1.2% to $55.9 billion in April as a record surge in petroleum exports offset swelling imports of semiconductors and computers tied to the AI data center buildout, Commerce Department data showed Tuesday.

"Soaring oil exports are helping to narrow the U.S. trade gap, with tariffs playing a more minor role in slowing imports," said Sal Guatieri, a senior economist at BMO Capital Markets.

Exports rose 2.6% to a record $327.1 billion, driven by a 60% jump in crude oil shipments as the Iran conflict and closure of the Strait of Hormuz drove global prices above $100 a barrel. The U.S. petroleum trade surplus swelled to a record $17.7 billion from $9.4 billion in March. Imports advanced 2% to $383 billion, led by a $7 billion increase in capital goods including computers, semiconductors and telecommunications equipment — up 83% from a year earlier.

The narrowing deficit provides a tailwind for second-quarter gross domestic product, with the Atlanta Fed tracking 3.3% annualized growth after a 1.6% pace in the first quarter. But the improvement hinges on elevated energy prices tied to a conflict with no clear resolution timeline, while President Donald Trump's tariff agenda has yet to materially alter America's structural trade imbalance.

Geopolitics, Not Tariffs, Driving the Shift

The data underscore how geopolitical shocks and industrial policy, rather than tariffs, are reshaping U.S. trade flows. Crude oil exports surged $6.4 billion to a record high, while exports of industrial supplies and materials hit $89 billion. Capital goods exports also reached a record $70.3 billion, lifted by computers and civilian aircraft.

On the import side, the AI infrastructure buildout continued to drive demand for foreign-made components. Imports of semiconductors rose $1.7 billion, computers climbed $2.2 billion and telecommunications equipment added $1.6 billion — a pattern that has persisted through more than a year of whipsawing tariff policy.

Since the start of Trump's second term, the monthly trade deficit has averaged just over $70 billion, compared with $72 billion during the Biden administration — a negligible shift despite repeated tariff actions. The Supreme Court struck down Trump's use of the International Emergency Economic Powers Act for broad tariffs in February, prompting the administration to turn to other authorities. A temporary 10% across-the-board tariff enacted in February is set to expire in July, while last week the administration proposed new duties of up to 12.5% on imports from 60 countries under a forced-labor rationale.

The April data showed the goods deficit with China narrowed $2.6 billion to $12 billion, though the shortfall with Vietnam — a key beneficiary of supply-chain shifts — widened. The European Union shifted from a $3 billion deficit in the fourth quarter to a $9.2 billion surplus in the first three months of 2026, reflecting a $6.3 billion increase in U.S. exports.

Services Surplus Shrinks as Travel Slumps

Exports of services fell $0.4 billion to $105.8 billion, dragged lower by a decline in travel spending by foreign visitors to the lowest level in more than two years. Imports of services rose $1.3 billion to $78 billion, led by transport, travel and insurance services.

On an inflation-adjusted basis, the real goods deficit narrowed 1.8% to $84.3 billion in April, compared with a 2.5% decline in the nominal measure. The annual revision incorporated in Tuesday's release showed the goods and services deficit for 1999-2024 was revised down by an average of 3.2%, reflecting upward revisions to the services surplus. For 2025, the deficit was revised up 2.2%.

This article is for informational purposes only and does not constitute investment advice.