Reuters, Washington

The US trade deficit jumped to a record high in March amid roaring domestic demand, which is drawing in imports, and the gap could widen further as the nation’s economic activity rebounds faster than its global rivals.

The White House’s $1.9t pandemic relief package and the expansion of the Covid-19 vaccination program to all adult Americans have led to a boom in demand, which is pushing against supply constraints.

Economic activity is also being boosted by the Federal Reserve’s ultra-easy monetary policy stance.

Manufacturers lack the capacity to satisfy the surge in demand and inventories are very lean, forcing businesses to import more goods.

Demand during the pandemic also shifted to goods from services, with Americans cooped up at home.

The trade deficit increased 5.6 per cent to an all-time high of $74.4b in March, the Commerce Department said on Tuesday. The trade gap was in line with economists’ expectations.

Imports soared 6.3 per cent to record high $274.5b in March.

Goods imports shot up 7.0 per cent to $234.4b, also a record high. Imports of consumer goods were the highest on record, as were those for food and capital goods.