US stockpiles on political risk
I came across this Reuters article to bring to our readers attention. Since President Trump announced 25% tariffs on $200 bin worth of Chinese imports US retailers have been stockpiling goods as they have brought orders forward to try and avoid the potential implication of tariffs. Companies such as Walmart Inc, Target Corp, TJX Companies Inc and Macy's Inc quickly bought Chinese products in September. Now, even since the 90 day truce declared on the import as retailers have still been increasing their inventory levels to try and mitigate the risk of any potential tariffs.
A premium being paid on warehousing and logistics
This inventory surplus has in turn led to a premium in warehousing and logistical cost. At this stage it is not clear who will be meeting these costs; the retailers or will they pass it on to the consumer. Most likely the retailers will meet the costs and there may be some really good deals for consumers after Christmas as folk rush to get rid of a large surplus of stock which is costing extra warehousing space. One winner from this has been US ports and logic companies with revenues up. However, this early surge may result in a slowdown for the second half of 2019. Either way , the boost in US inventories will certainly recede for 2019 and the knock-on impact of a slowdown will be felt later rather than sooner
Here is the current US China trade deficit.
