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FOREWARNED IS FOREARMED Forewarned is forearmed and businesses jumped into action to beat the deadline and get products into the country before the tariffs went into effect. In the first three months of 2025 US Imports averaged $407 billion per month; the amount is
unprecedented.Chart 2.
Of course, there is the Export offset to the Imports, but the volume of goods heading out of the country simply could not keep pace with the goods coming in. In the first three months of the year the US Trade Balance averaged a monthly deficit of $130 billion. The next largest three-month average trade deficit is less than $90 billion. Chart 3 overleaf.
There was no intention to sell all these imports right away; businesses not only wanted to beat the tariffs for sales in the week’s following April 2, but also for seasonal periods later in the year, such as back to school, Halloween, etc. So not everything went right to the shop shelves, but a lot of the imported goods went directly to the storeroom. GDP inventory accumulation was huge in Q1, up at $160 billion at a seasonally adjusted annualized rate; notably large. Chart 4.
Chart 2. Source: Bloomberg Finance L.P. T
So, on the one hand there was a record setting trade deficit in Q1, which takes away from the GDP growth calculation and a quite large increase in inventories, which adds to growth. As it turns out these were the two largest factors for the Q1 GDP; each pulling in the opposite direction.
33 | ADMISI - The Ghost In The Machine | Q3 Edition 2025
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