U.S. Imports of Consumer, Capital Goods Jump Amid Tariff Threat

(Bloomberg) --

U.S. imports of consumer and capital goods jumped in August by the most this year, suggesting American companies scrambled to beat another round of tariffs on Chinese merchandise.

All other major import categories declined, though, and the overall merchandise-trade deficit widened by less than forecast to $72.8 billion, according to Commerce Department data released Thursday. The government’s advance report also showed wholesale inventories increased by the most in three months.

Key Insights

• The data offer a first glimpse of the effects of President Donald Trump’s Aug. 1 announcement of a 10% tariff on an additional $300 billion in Chinese goods. Companies have tended to boost shipments after the announcement or threat of levies, to get ahead of paying higher prices.
• U.S. imports of consumer merchandise increased 2.6% from the prior month, while imports of capital goods jumped 3.2%, both the largest increases since December. Imports in other categories declined, including industrial supplies such as crude oil. The figures are preliminary and don’t include a regional breakdown, which will come with the full report Oct. 4.
• Washington’s trade war with Beijing has created supply-chain headaches for U.S. firms that rely on Chinese imports, at the same time capital spending slows in response to weaker global growth.
• Economists had projected an August deficit of $73.4 billion. The trade figures will help shape estimates for third-quarter gross domestic product. A separate report Thursday showed GDP expanded an annualized 2% in the second quarter, unrevised from the previous estimate, with net exports subtracting 0.7 percentage point.

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• Exports climbed 0.1% in August on increased shipments of foods, industrial supplies and automobiles. U.S. shipments of consumer merchandise and capital goods declined.
• The advance report also showed wholesale inventories increased 0.4% in August after a downwardly revised 0.1% July gain. Retail inventories were little changed. Economists factor these numbers into their GDP growth estimates.
• Exports and imports of goods account for about three-fourths of America’s total trade; the U.S. typically runs a deficit in merchandise and a surplus in services.
• Thursday’s report covers only goods, not services, which will be covered in the Oct. 4 report from the Commerce Department.

--With assistance from Jordan Yadoo.

To contact the reporter on this story: Katia Dmitrieva in Washington at edmitrieva1@bloomberg.net

To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Vince Golle

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