Business owners and CEOs already stock up, while some American shoppers are buying big ticket items in anticipation of President Donald Trump’s tariffs. Sudden shopping could lead to “artificially high” levels of economic activity, Federal Reserve Bank of Chicago, President Austan Ghoolsby, said.
“That pre-buy like that is probably even more pronounced in terms of business,” Ghoulsby told CBS’s “Face the Nation” on Sunday, adding, “We’ve heard a lot about building an up-front inventory that lasts for 60 or 90 days if there was more uncertainty.”
Companies that stock up on inventory and accelerate consumers’ decisions – Purchase apple For example, instead of waiting until fall, the iPhone could inflate US economic activity in April, leading to slowing down in the coming months, Goolsbee proposed.
“The activity may seem artificially expensive at first, but it may fall by summer, because people have bought it all,” he said.
Trump’s tariffs, particularly the sector affected by the automotive industry, are most likely to focus on current inventory before taxation on goods from other countries rises further, Ghoulsby said. For example, many auto parts, electronic parts and other expensive consumer items are manufactured in China. For example, the total tariff rate for goods imported into the US is currently 145%.
Trump’s tariffs on many other countries are currently in the middle of a 90-day suspension, with a baseline tariff rate of 10% instead applied to all goods imported entirely. The suspension is scheduled to expire on July 9th, and Trump has sometimes promoted a series of rate negotiations with foreign leaders.
“We don’t know how big they will be when they revisit the tariffs 90 days later,” Ghoolsby said.
Some US business owners who buy products manufactured in China say they can’t afford to place rush orders on inventory. Matt Lawrence, owner and CEO of Granite Bay, California, says he temporarily holds the product in China as paying a 145% tax would force consumer prices to be raised by at least 50%, which would likely increase customer demand.
Rollens has enough stock in the US to last almost until June and hopes that tariffs will return by then, he told CNBC he was making it on April 11th.
Short-term uncertainty and economic pain aside, Fed Ghoulsby has expressed optimism about the country’s long-term economic outlook.
“If you can get through this, it’s important to remember. The hard data coming in April was pretty good. The stable full employment, the unemployment rate (was) for inflation () was down,” he said. “It’s the desire of people to express their desire to go back to ’21 and ’22 when inflation is really out of control.”
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