The ‘Bullwhip Effect’ in Trade Is Going to Be Painful
The surge in imports won’t buffer US companies from tariffs forever. Higher prices or squeezed margins are near at hand.
Slowing down.
Photographer: Eric Thayer/Bloomberg via Getty Images
When it comes to tariffs, US companies have taken President Donald Trump both literally and seriously. Imports have surged by $79 billion since he was elected in early November on a platform to rework the global trading system by imposing hefty levies on goods coming into America. On a percentage basis, the increase was the biggest for any five months since the period ended February 1992, data from the Commerce Department Tuesday show.
There’s good reason to believe that this surge in imports can’t last much longer. In fact, it’s probably over, which begs the question of how businesses manage their bloated inventories, and what happens when companies run them down and need to stock up again? Get ready for the “bullwhip effect.”