In Q1, U.S imports surged at the fastest pace since the COVID recovery, driven largely by businesses front-loading goods ahead of expected tariff hikes. However, the increase was highly uneven across sectors. Much of the growth was concentrated in a few specific items, such as computers, semiconductors, telecommunications equipment, finished metal parts, and pharmaceutical products.

A new report by Ned Davis Research (NDR) demonstrates that imports of capital goods rose 20% - the largest jump in nearly four years – mainly due to tech-related items, while other areas like farming and manufacturing equipment showed no unusual trends. Food imports grew modestly, with gains seen primarily in coffee, tea, and spices. Auto and parts imports spiked in March but were down year-over-year for the full quarter.

Overall, imports grew at an annualized rate of 41%, but this front-loading distorted trade data and significantly dragged down Q1 real GDP growth, with net trade subtracting a record 4.8 percentage points. NDR says the data suggests continued volatility in Q2, as some firms may use the current 90-day tariff moratorium to further stockpile goods. Notably, despite widespread U.S. reliance on Chinese consumer goods, there was limited evidence of inventory buildup in most categories - except for a noticeable rise in cell phone imports.

For more insights on the current import situation, click here.