Trump's Tariff Plans Spur Temporary Boost

President-elect Trump’s proposed tariffs are expected to weigh on the economy long-term, but businesses are rushing to beat the clock, creating a short-term boost. Companies are fast-tracking orders and stockpiling goods ahead of anticipated trade policy changes, temporarily lifting GDP.

Joe Brusuelas, chief economist at RSM, estimates this preemptive activity could add 0.2% to GDP this quarter. However, he expects the effect to reverse in the following quarters. “We’re going to get this noise in one part of the economy that has to do with trade,” he told Axios, highlighting the temporary nature of the uptick.

West Coast ports, including Los Angeles, are handling unusually high cargo volumes as businesses race to secure inventory. “Factories are running full tilt, and shippers are working to avoid delays,” Gene Seroka, head of the Port of Los Angeles, told Transport Topics, an industry trade publication. He compared the surge to a similar 2018 pre-tariff rush, followed by a steep drop-off.

While companies like Stanley Black & Decker are increasing inventory in anticipation of higher costs, their ability to stockpile is limited. Paying for warehouse space and tying up capital is unsustainable long-term. “They can bring it forward, but they can't do that much,” said Minneapolis Fed President Neel Kashkari.

Though these maneuvers provide a short-lived boost, they also reflect the challenges of Trump’s trade agenda. Tariffs often raise consumer prices, but not all businesses can pass these costs on, especially in competitive markets.

Despite Trump’s push to reduce reliance on imports, companies are currently importing goods at historic levels.

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