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The US trade deficit surged to record highs in January as businesses masked supply of foreign products and metals ahead of the expected imposition of tariffs by President Donald Trump.
The gap between exports and imports of goods has increased by more than 25% from the previous month, according to figures from the Commerce Department. Prior to the Bloomberg survey, it far surpassed economists’ forecasts for a $1160 billion shortfall, according to a Bloomberg survey.
The figures suggested that American companies were stockpiled overseas as they prepared tariffs for many of the domestic closest trading partners, including Canada, Mexico, China and the EU, analysts said.
Among the possible drivers, they added, was the shipment of gold bullion to the US.
“That’s been a huge increase,” said James Knightley, ING’s economist. “It’s a strong indication that many of our retailers and manufacturers are very nervous about their supply chains and want to be ahead of the tariff threat.”
Advanced data from the month shows that US exports rose 2% from a seasonally adjusted 2% the previous month, while imports rose more than 11%. Industrial goods imports rose nearly 33%.
A complete breakdown of the geographical patterns of the data is not available yet. One possibility, analysts said, was that data was driven by a surge in gold shipments from Europe to New York amid concerns that Trump would impose tariffs on bullion. Analysts at Goldman Sachs said they hope that this impact on data will reverse “relatively quickly.”
As Traders pulled gold from London and moved to New York ahead of potential tariffs, the value of gold stored in the Comex Exchange of New York increased by about $25 billion in January, according to financial Times calculations.
However, US data shows that consumer goods shipments also rose sharply in the month, up over 8%, while automobile imports increased modestly by 2%.
The Los Angeles ports and Long Beach, California (two of the two most active container ports in the country) each recorded their busiest January. Long Beach said the rise is “mainly driven by retailers moving freight ahead of expected tariffs on goods from China, Mexico and Canada.”
Imports of solar panels and other solar energy equipment quadrupled to over 59,000 equivalent container units between December and January, according to trade data aggregator Importgenius.
This week, US-based manufacturer First Solar told analysts that warehouse rental rates had increased.
This week, Trump said he would press first with a 25% collection of EU products. He has already imposed an additional 10% obligation on China, and has reiterated that a 25% tariff on Canada and Mexico will come into effect on March 4th.
Further tariffs are looming on China, with mutual tariffs looming on countries around the world in the second half of the spring.
Many US business executives downplay tax concerns. “We’ve been through this before, but we have an excellent track record of working with our suppliers to ensure we stay as sharp as possible about our value,” Home Depot’s Chief Financial Officer Richard McFile said in an interview Tuesday.
“But at this point, we don’t know how much implementation is or what products will be.”
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Brad Sesser, a senior fellow at the Council of Foreign Relations, said the 25% tariffs Trump threatened with some economies’ products was “pretty cruel” and meant that businesses would try to move ahead of them.
“These are tariffs large enough, and people are not indifferent to them, but they try to avoid them,” he said.
Knightley said the latest data contributes to the downside risk of first quarter GDP data.
“The story turns to the idea that the (economic) happiness around Donald Trump may be a bit overrated,” he said.
Additional Reports by Valentina Romei
