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Takeaways
- Imports to the U.S. soared in March. They broke records and set the stage for a fall-off in the following months.
- Businesses likely stockpiled goods while they could still be purchased without paying President Donald Trump's "Liberation Day" tariffs that took effect in April.
- The rise in imports could drag down GDP and send the widely watched measure for economic growth into negative territory during the first quarter.
In March, the U.S. imported more than ever before as businesses and consumers rushed to buy products from abroad ahead of President Donald Trump’s tariffs.
Census Bureau reported Tuesday that the U.S. imported $342.7billion worth of goods in march, a 5% increase from February and an all-time high. The trade deficit (the difference between imports & exports) also reached a new record of $162 billion.
Future import data are likely to reflect the impact of President Donald Trump’s massive “Liberation Day”, or anti-U.S. trading partner tariffs, announced on April 2, 2018. This announcement included a 10 percent import tax on nearly all products imported from abroad, and a 15 percent tariff on most Chinese goods. The tariffs were announced in April and then modified. Some of them were delayed 90 days.
Matthew Martin is a senior U.S. Economist at Oxford Economics. He wrote in a blog that March’s trade data were backwards-looking. They would not have taken into account the impact of the ‘Liberation Day” tariffs or subsequent tariff tweaks. “The much higher effective tariff rates in April onwards will likely act as a deterrent to imports, meaning imports are headed toward a cliff.”
The surge in imports will drag the economy down, at least in paper. Imports are subtracted from the gross domestic product (GDP), which is a measure of a nation’s total economic output. A preliminary estimate of GDP for the first three months is due on Wednesday. The increase in imports might lower the much-anticipated figure.
US GDP Forecasts for Q1 Revised Downward
Oxford Economics, among others, said Tuesday that the first quarter GDP growth would be one of the lowest in history.
The Federal Reserve Bank’s GDP Now tool tracks GDP and economic data as they come in. On Tuesday, the GDP fell at a seasonally adjusted annual rate of 2.7%. If the economy shrinks, it will be the first time since early 2022.
