Jashan -
I think this is a misunderstanding about how @import works within CSS -- the behavior you are seeing is working as designed.
CSS @import is built around providing a URI for additional stylesheets (
https://developer.mozilla.org/en-US/docs/CSS/@import), which is designed to be requested by the browser itself as a separate HTTP request. As a result, CSS @import is not recommended for general use, because it increases the number of files your web page requires in order to load (and more files mean slower load speeds). Unfortunately for your case, since this is a native CSS feature there is no way for SquishIt (or any CSS-compliant minifier) to properly use those @import statements to inline your styles. For that, you'd need a custom tool.
There are two ways you can attack this problem, both of which result in a single, combined CSS file and therefore in a faster page load speed:
First, you could include the LESS pre-processor, re-name all your stylesheets from .css to .less, and call it a day. Unlike CSS, LESS
will go fetch and include those files into the final document. Since CSS is valid less, just making this change alone would get you what you want---for more information, see the "Importing" section under the LESS language reference here:
http://lesscss.org/#-importing
Finally, perhaps the conceptually simplest response to the problem would be to stop using @import, and to use .Add("") statements instead. @import was designed for an age that did not yet have tools like SquishIt, and SquishIt does effectively the same thing through bundling, without any of the performance hit.
Hope that helps, either of those options should get you to where you need to be!