This is especially as the world heads towards a Jul 9 deadline when Trump’s pause on higher duties for dozens of economies including the European Union, Japan and South Korea is due to expire.
“A worst-case tariff outcome this month would apply further downward pressure on imports,” Yaros warned.
The path forward is unclear and he expects levels to land somewhere between their current position and the steep levels initially unveiled in April.
He cited a US deal with Vietnam announced Wednesday where the country averted the harsh tariff rate Trump first announced.
But Yaros maintains that “the true health of the economy will be better distilled by the consumer and business spending figures, which are showing signs of weakness.”
Carl Weinberg, chief economist at High Frequency Economics, expects Federal Reserve policymakers to look past the fluctuations in inventories as they decide on further interest rate adjustments.
“There is not much in this report to alter the Fed’s view that the economy remains strong,” he said.
