In reaction to President Donald Trump’s impending tariffs, numerous business leaders and CEOs are ramping up their inventory levels. Meanwhile, a segment of American consumers is engaging in panic buying of high-ticket items. This spike in purchasing activity could distort the economic landscape, creating what Federal Reserve Bank of Chicago President Austan Goolsbee describes as an “artificially high” level of economic activity.
During an interview on CBS’ “Face The Nation” on Sunday, Goolsbee noted, “That kind of preemptive purchasing is probably even more pronounced on the business side.” He elaborated that many businesses are actively building up their inventories in anticipation of increasing uncertainty, with preparations potentially extending for 60 to 90 days.
The combination of businesses accumulating stock and consumers hastening their purchases—such as opting to buy an Apple iPhone earlier than planned—could artificially inflate economic activity figures in April. Goolsbee warned this spike might be short-lived, suggesting, “Activity might look artificially high in the initial, and then by the summer, might fall off — because people have bought it all.”
Industries that will be hit by Trump’s tariffs, particularly the auto sector, are likely to stock up on inventory preemptively to avoid the impact of potential future import levies. For instance, a significant number of car parts and other expensive consumer goods are sourced from China, which is currently facing a staggering 145% tariff rate on imports to the United States.
Currently, Trump’s tariffs on various countries are under a 90-day pause, during which a baseline 10% tariff rate is applied across all imported goods. This pause is expected to end on July 9, as Trump engages in negotiations with foreign leaders to potentially adjust tariff rates.
Goolsbee expressed uncertainty about the outcome, stating, “We don’t know, 90 days from now, when they’ve revisited the tariffs, we don’t know how big they’re going to be.”
With adequate stock to last until June, Rollens remains hopeful that the tariffs will be reduced by that time, as he discussed with Finance Newso Make It on April 11.
Despite short-term challenges and uncertainties, Goolsbee conveyed a sense of positivity regarding the long-term economic outlook for the country. He pointed to solid data leading into April, noting, “The unemployment rate was around steady full employment, inflation was coming down.” He expressed concern that the prevailing mood is driven by a collective desire to avoid a return to the high inflation crises of 2021 and 2022.
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