US imports surged to an unprecedented high in December, as American companies rushed to bring in goods amid President Donald Trump’s threats of sweeping tariffs on trading partners.
This dramatic increase saw imports reach a staggering £291.5billion, marking a 3.5 per cent rise that pushed America’s trade deficit to its highest level in three years; which the re-elected Republican leader wants to bring down.
The surge came in direct response to Trump’s post-election promises to impose universal global tariffs, particularly targeting nations with significant trade deficits with America.
Last week, the US President pledged to implement 25 per cent tariffs on Mexico and Canada, which have been postponed for 30 days, and a 10 per cent tax hike on imports from China.
Based on this spike in reported import activity across global markets, businesses are scrambling to secure their supply chains ahead of any potential trade restrictions in the years ahead.
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Blow to Trump as US imports surge to record high amid backlash to tariff threat
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The US Commerce Department revealed exports fell by 2.6 per cent to $266.5billion in December, which coupled with the surge in imports, pushed the trade deficit to $98.4billion over the same period.
This is a stark increase from November’s $78.9billion figure with the deficit figures representing a significant shift in US trade patterns, reaching levels not seen in the past three years.
Trump’s tariffs on China have now taken effect, marking a significant escalation in his trade policy agenda. The White House has delayed imposing levies on Canada and Mexico until March, contingent upon securing specific concessions from these nations.
According to the President, the European Union appears to be next in line, with Trump declaring the bloc would “definitely” face tariffs, citing its substantial trade deficit with the United States.
Thomas Ryan of Capital Economics offered a stark assessment of the import surge, noting it was “largely driven by businesses rushing orders ahead of potential tariffs”.
He warned this trend was “unlikely to reverse any time soon” given the looming threat of 25 per cent tariffs on Mexico and Canada next month, with countries promising taxes in retaliation.
Despite positive indicators for export growth, Ryan suggested the trade deficit would remain substantial in the current quarter despite Trump’s attempts to bring it down.
Analysts Carl Weinberg and Mary Chen from High Frequency Economics attributed the import surge to companies’ strategic planning around the President’s tax threats.
According to the analysts, whilst the spike in import volumes likely reflects efforts to “accelerate imports to beat Trump import threats,” definitive proof remains elusive.
Both Weinberg and Chen pointed out that strong exports out of the US also suggest “a fast-growing economy that is near its full potential level of output”.
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