The Commerce Department reported the trade gap narrowed to $38.8 billion, from a revised $43.6 billion in February, the second month in a row that it shrank.
A sharp drop in imports reduced the gap in March. Imports totaled $223.1 billion, down from $229.6 in February.
Exports also declined, to $184.3 billion from $186.0 billion the prior month.
The country's trade balance in goods and services with the rest of the world was better than most analysts expected. The average estimate was for a $43.0 billion deficit.
Crude oil imports, which account for nearly 10 percent of the goods imported into the United States, fell 8.4 percent to $21.6 billion in March.
Consumer goods, including clothing and appliances, dropped 7.5 percent to $41.8 billion.