President Trump has long been a master of creating must-see TV … and his latest trade war is no exception…
As I write, Trump’s tariffs on Mexico and Canada have both been postponed, but a 10% tariff on Chinese imports remains in place.
But the situation is still evolving from one hour to the next…
On Tuesday, the Chinese government retaliated with a 15% duty on various American imports — ranging from farm machinery to natural gas — however, those tariffs won’t go into effect until next Monday.
Traditional media seems to be surprised every day when the Trump administration talks about using tariffs to reduce trade deficits or elicit a response from a country.
If they were listening on the campaign trail in 2024, none of these moves — besides maybe the last-minute pullback — would surprise them.
And there’s one group who clearly saw it coming all along…
Chart of the Week: Stocking Up For Trump’s Tariffs
Economists, financial media pros and talking heads continue to be surprised when the White House announces that the Trump administration is levying tariffs.
You know who hasn’t been surprised by all of this?
The American people:
According to U.S. government data released last week, durable goods consumption jumped 12.1% in the fourth quarter of 2024.
That’s the highest growth in more than two years and accounted for more than one-third of the 2.3% growth in U.S. real gross domestic product.
It seems that after President Trump was re-elected in November 2024, the American people went on a spending spree … buying televisions, cars, computers and other durable goods — all items considered “tariffable.”
Phone sales jumped 24.3%, while information processing equipment sales climbed 20.8%.
Recreational vehicles sold went up 19.7%, and motor vehicles rose 13.9%.
All of these items have one thing in common: they all contain parts or equipment imported to America from… you guessed it… Mexico, Canada and China.
American Consumers Aren’t Blind
One thing you can say about the American consumer is that they know a good sale when they see it.
Apparently, they also know when prices are as good as they are going to get.
December 2024 data from the University of Michigan Surveys of Consumers showed that 22% of American consumers thought now was a good time to buy household durable goods because prices aren’t likely to come down anytime soon.
Part of that is because inflation (without energy and food) stood at 2.8% for the last three months of 2024 after falling to 2.6% in June.
That’s still well above the Federal Reserve’s target of 2%.
Then, you factor in the rhetoric over tariffs the Trump administration discussed before the inauguration in January.
Now that those tariffs are coming more into focus … and closer to reality … it seems the American public hit the nail right on the head.
And, more importantly, bought at just the right time.
That’s all from me today.
Until next time…
Safe trading,
Matt Clark, CMSA®
Chief Research Analyst, Money & Markets