As you can see from thechart below, according to LSEG Data & Analytics, Chinese exports grew 12.7%year-over-year for the month ending October, the fastest pace in 27months. These figures were far above theconsensus estimate of 5.2%. However,imports were negative for the first time since June. We believe that the strong export orderscould potentially be a result of U.S. Companies front loading orders inanticipation of the potential for tariffs imposed by President Elect Trump onforeign made goods while the weakness in imports could signal a weak Chineseeconomy.
Love or hate Trump,what we do know, is that his unpredictable nature tends to lead touncertainty. The increase of orders,we think, will continue throughout the end of the year and into 2025, prior toPresident Elect Trump taking office. Walmart, Lowe’s and AutoZone all released statements this past weeknoting that these tariffs will be passed on to the consumer and a one-timeincrease in the price of goods sold. Infact, a Walmart spokesman said, “We’re concerned that significantly increasedtariffs could lead to increased costs for our customers at a time when they arestill feeling the remnants of inflation.”
Soon, we will get abetter picture on how much of Trump’s tariff talk was election rhetoric and howmuch will be implemented as policy. Thehope is that although tariffs could cause a short-term spike in prices, thelonger-term result of applying tariffs strategically will be an increase indomestic manufacturing jobs, a more secure supply chain, a level playing fieldand a cessation of inflation above the Fed’s 2% target.
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