U.S. Current Account Deficit Hits Record High, Surges 1382 Billion Dollars

In the first quarter, the United States experienced a significant surge in its current account deficit, reaching an all-time high. This increase was primarily driven by businesses accelerating their imports to avoid high tariffs imposed by the Trump administration on imported goods. The current account deficit, which measures the flow of goods, services, and investments across borders, rose by 1382 billion dollars, reaching a record high of 4502 billion dollars. This figure was revised from the previously reported 3120 billion dollars for the fourth quarter.

The deficit now constitutes 6.0% of the country's Gross Domestic Product (GDP), the highest level since the third quarter of 2006 when it peaked at 6.3%. This is a notable increase from the 4.2% recorded in the last three months of the previous year. Economists have expressed concern that the widening current account deficit, coupled with the rising federal budget deficit, could pose long-term risks to the U.S. dollar. The extensive tariff policies implemented by the Trump administration have weakened the dollar's status as a safe-haven currency.

Goods imports surged by 1582 billion dollars to a record high of 100 billion dollars, driven primarily by non-monetary gold and consumer goods, including pharmaceuticals, medical, and dental products. In contrast, service imports decreased by 18 billion dollars to 2178 billion dollars, largely due to a reduction in fees for the use of intellectual property, such as research and development results.

Goods exports increased by 211 billion dollars to 5390 billion dollars, the highest level since the third quarter of 2022. This increase was primarily driven by capital goods, including civilian aircraft, computer accessories, peripheral equipment, and components. Service exports, however, decreased by 44 billion dollars to 2932 billion dollars, impacted by a decline in government goods and services exports, particularly from military units and institutions. Personal travel and professional and management consulting services also saw a decrease.

The goods trade deficit expanded from 3289 billion dollars in the fourth quarter to a new record high of 4660 billion dollars. However, as the wave of pre-imported goods subsides, the import surge has begun to cool down. The U.S. government reported a record drop of 19.9% in goods imports for April, falling to 2779 billion dollars.

In the first quarter, primary income receipts decreased by 229 billion dollars to 3551 billion dollars, while primary income payments also decreased by 137 billion dollars to 3627 billion dollars. Both receipts and payments of primary income were constrained by a decline in direct investment income, primarily earnings. Secondary income receipts increased by 23 billion dollars to 496 billion dollars, driven mainly by fines and penalties. Secondary income payments decreased by 84 billion dollars to 1015 billion dollars due to a reduction in government transfer payments.