US Companies Stockpile Inventory to Mitigate Tariffs, First Quarter Economic Data Affected

Taiwan • Business • 04/30 05:03
US Companies Stockpile Inventory to Mitigate Tariffs, First Quarter Economic Data Affected

In early April, U.S. President Trump announced a 145% tariff on Chinese products. To avoid the high tariffs, companies significantly increased imports in March, leading to the U.S. trade deficit expanding to a record high of $162 billion. This move increased the total import amount, negatively affecting the GDP for the first quarter of 2025, with the possibility of economic growth stalling or contracting. Multiple institutions forecast a decline in first-quarter GDP, highlighting the direct impact of trade policy on economic activity.

Key Updates

04/30 13:31

In April 2025, private sector job growth in the United States slowed to 62,000, marking a nine-month low.

In April 2025, the U.S. private sector added 62,000 jobs, which was below the expected range of 115,000 to 125,000, representing the smallest increase since July 2024. ADP data shows that companies are cautiously expanding their workforce due to uncertainties in policy and consumer behavior. This report was released two days before the U.S. Department of Labor's non-farm employment report, offering the latest insights into the labor market.

04/30 11:04

China plans to exempt certain American goods from the 125% tariff, focusing on textile and semiconductor companies.

The Chinese government is implementing a tariff exemption policy, exempting certain American goods from the 125% retaliatory tariffs, including ethane, certain pharmaceuticals, aircraft engines, and some semiconductor products. Local governments are conducting investigations into textile and semiconductor companies to evaluate the impact of the trade war. Companies must verify if their imported goods qualify for the exemption. The policy has yet to be officially announced, indicating a pragmatic adjustment by China despite maintaining a tough stance.

04/30 09:30

Due to Uncertainty from Trump's Tariff Policy, Stellantis Pauses Full-Year 2025 Forecast

On April 30, 2025, global automaker Stellantis announced that due to the frequent changes in President Trump's tariff policies on imported cars and components, creating an uncertain market outlook, the company has decided to withdraw its financial guidance for the full year 2025 and reassess its capital expenditure plans. Other automakers, such as General Motors and Mercedes-Benz, have also withdrawn their financial forecasts due to tariff uncertainties, highlighting the automotive industry's significant concern over changes in U.S. trade policies.

04/30 09:02

EVA Air's Response to U.S. Tariff Policies: Adjusting Flight Routes and Adding Cargo Flights to Southeast Asia

In response to the U.S. reciprocal tariff policy, EVA Air is closely monitoring the changes in passenger demand during the summer and anticipates a shift in some cargo volume from China to Southeast Asia. The company has launched a route adjustment plan, aiming to add cargo flights to destinations like Penang, Hanoi, and Bangkok. General Manager Sun Chia-ming mentioned that passenger transport saw growth in the first quarter, while the cargo market is adjusting its routes due to supply chain shifts, allowing for a flexible response to market changes.

04/30 07:05

S&P Global: The trade war will not affect the credit ratings of the US and China in the short term. According to S&P Global, following Trump's tariff hikes, the US rating remains stable, while China's rating has been downgraded by Fitch.

In early April 2025, President Trump of the United States announced tariffs on global goods imported into the U.S., raising market concerns regarding the sovereign credit ratings of both China and the U.S. S&P Global indicated that in the short term, the trade war would not directly impact the sovereign credit ratings of China and the U.S., maintaining a stable outlook for the U.S.'s AA+ credit rating and noting the resilience of China's A+ credit rating. However, after Trump's announcement of tariffs, Fitch downgraded China's credit rating by one notch, becoming the first major agency to adjust China's credit rating.

04/30 05:03

US Companies Stockpile Inventory to Mitigate Tariffs, First Quarter Economic Data Affected

In early April, U.S. President Trump announced a 145% tariff on Chinese products. To avoid the high tariffs, companies significantly increased imports in March, leading to the U.S. trade deficit expanding to a record high of $162 billion. This move increased the total import amount, negatively affecting the GDP for the first quarter of 2025, with the possibility of economic growth stalling or contracting. Multiple institutions forecast a decline in first-quarter GDP, highlighting the direct impact of trade policy on economic activity.

04/30 05:03

Adidas is under pressure to raise prices due to high tariffs imposed by the US, and the CEO warns that the Samba and Campus shoes might be affected.

The German sports brand Adidas experienced a 155% increase in net profit and a 12.7% increase in revenue in the first quarter of 2025. However, as a result of the high import tariff policies implemented by former U.S. President Trump, CEO Björn Gulden warned that the prices of shoes such as the Samba and Campus models might increase in the U.S. Given the uncertainty surrounding tariff policies, Adidas has not adjusted its full-year financial forecast and stated that it is unable to predict how price increases will affect consumer demand.

04/30 00:31

U.S. President Trump signed an executive order to adjust car tariffs to support domestic manufacturing.

On April 29, 2025, President Donald Trump of the United States signed two executive orders to adjust the tariff policy on automobile and component imports, to provide a short-term buffer for American car manufacturers. The new policy allows certain vehicles assembled in the United States with foreign parts to be exempt from the 25% import tax and provides phased compensation for qualifying components. This adjustment, made after prolonged lobbying by the automotive industry, aims to protect domestic manufacturing and encourage the repatriation of supply chains to the United States.

04/29 21:30

The United States is Facing Economic Shocks Driven by Policy: Increasing Instability Due to Trade Deficit and Pressure from the Debt Ceiling.

In the spring of 2025, the U.S. economy faces instability, with a trade deficit reaching $162 billion USD as companies are importing in advance to cope with high tariffs. The consumer confidence index dropped to 86, and the manufacturing activity index fell to -35.8. Tariff policies have triggered a reorganization of supply chains, leaving the Federal Reserve in a dilemma between cutting interest rates and controlling inflation. The federal debt ceiling issue heightened market unease, causing the S&P 500 index to drop by 10% and foreign capital to withdraw. Economists warn of an imminent policy-driven economic shock.

04/29 19:02

In response to Trump's tariff policies, Taiwanese electronics manufacturing giants like Inventec, Foxconn, and Wistron have strategically established factories in Texas.

Major Taiwanese electronics contract manufacturers such as Inventec, Foxconn, Wistron, Wiwynn, Quanta, and Compal have responded to the high tariff policies of former U.S. President Trump by establishing or expanding their operations in the United States, with Texas becoming the preferred location. These companies' investments reflect their focus on the U.S. market and their quick adaptability to the restructuring of the global supply chain. Texas attracts Taiwanese investment with its vast land, stable electricity supply, and low taxes, and could become a major hub for Taiwan's electronics manufacturing industry in the U.S.

Pre-Tariff Stockpiling Surge Pushes Up Imports and Trade Deficit

According to data released by the U.S. Census Bureau on April 30, 2025, the U.S. goods trade deficit expanded by 9.6% in March, reaching a record high of $162.0 billion. This figure reflects businesses' rush to import goods before the Trump administration's tariff announcement took effect, aiming to avoid the impending high tariffs.

Total imports surged by $16.3 billion in March, reaching $342.7 billion, marking a rare monthly increase. Although exports also rose, increasing by $2.2 billion to $180.8 billion, it was not enough to offset the import surge. The growth in exports was mainly driven by automobiles, food, and industrial goods, while capital and consumer goods exports declined.

The backdrop of this import surge is the Trump administration's announcement on April 2 to impose a 25% tariff on Chinese goods, with China responding with a retaliatory 25% tariff. Prior to this, companies accelerated imports from China and other affected countries, leading to a short-term spike in port cargo volumes.

Inventory Rise Fails to Offset GDP Drag

Some imported goods entered wholesale warehouses, reflected in a 0.5% rise in wholesale inventories in March. This includes increases in both durable and non-durable goods inventories. However, economists point out that the extent of this inventory accumulation is limited and cannot effectively offset the negative impact of imports on GDP.

According to a Reuters report, economists estimate that net exports may drag down first-quarter GDP by as much as 1.9 percentage points. The Atlanta Federal Reserve's GDPNow model predicts a 2.5% decline in first-quarter GDP. Goldman Sachs forecasts a contraction of 0.8%, while JPMorgan predicts -1.75%.

Although some analysts caution that the imports include a significant amount of non-monetary gold, which may distort the data, the overall trend still indicates that the trade deficit is putting pressure on economic growth.

Signs of Slowing Economic Growth

According to a Reuters survey of economists, the annualized growth rate of first-quarter GDP is estimated to be only 0.3%, the slowest pace since the second quarter of 2022. This forecast was made before the release of trade and inventory data, and the actual figures may be weaker.

In terms of consumer spending, although some households made purchases in advance to avoid price increases, overall spending momentum has slowed. According to preliminary estimates from the U.S. Department of Commerce, the personal consumption expenditures price index (PCE), excluding food and energy, rose by 3.3% in the first quarter, higher than the previous quarter's 2.6%, indicating that inflationary pressures remain.

Additionally, business investment and construction activities have also shown weakness. According to INSEE data, gross fixed capital formation (GFCF) declined by 0.2% in the first quarter, marking the second consecutive quarterly decline.

Ports and Retail Industry Feel the Impact

Gene Seroka, Executive Director of the Port of Los Angeles, stated that with the tariffs taking effect, port cargo volumes are expected to drop significantly, and some retailers have stopped importing goods from China. According to CNBC, in the coming weeks, retailers' inventories may only last 5 to 7 weeks, after which product selection will noticeably decrease.

Syracuse.com reported that retailers like Walmart and Target have expressed concerns to the White House about product shortages and rising prices. The National Retail Federation (NRF) predicts that if tariffs persist, import volumes will decrease by at least 20% in the second half of 2025.

Economic Data Disrupted by Policy

Economists generally believe that the Trump administration's tariff policies have created significant uncertainty for business decision-making. Moody’s Analytics economist Matt Colyar noted that frequent and unpredictable policy changes make it difficult for businesses to plan import and pricing strategies.

Although some analysts suggest focusing on final sales data excluding trade and inventory to more accurately reflect domestic demand, even these figures may be distorted by advance purchasing and stockpiling behaviors.

References

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