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The US trade deficit widened sharply in December, with imports jumping 3.5%, with goods surging particularly from Mexico, Canada, and China, Reuters reported.
The uptick came as businesses braced for the impact of US President Donald Trump’s repeated tariff threats on China, Mexico, and Canada. Mexico and Canada managed to delay a duty hike, but the US has imposed 10% tariffs on goods from China.
“The strength of imports appears largely driven by businesses rushing orders ahead of potential tariffs, a trend unlikely to reverse any time soon given there is still the risk of 25% tariffs on Mexico and Canada next month,” one economist told Reuters.
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Among the most vulnerable industries to the tariffs is tech: Companies like Apple assemble many of their products in China, which accounts for 78% of US smartphone imports and 79% of laptops and tablets, The Associated Press reported. E-commerce firms also stand to lose out: A loophole used by Chinese retail apps Temu and Shein to import goods at rock-bottom prices to the US was closed by Trump’s order. Unless the companies come up with a workaround, like shipping Chinese products to Vietnam, and then the US, then the cost will almost certainly be borne by consumers, one analyst told CNN.
During the first Trump administration, “consumers bore basically 90 to 100% of the cost of a tariff,” he said. “So, if that similar dynamic exists, consumers could expect a 10% increase if it’s coming from China.”