Maybe, maybe not. The NYT headline blares “Tariffs Shrank Trade Deficit in September, New Data Show”. Imports did decrease from earlier, but that’s after a tremendous surge. The actual article is a more nuanced (i.e., that’s a lousy title).
Brad Setser, a trade expert at the Council on Foreign Relations, said the data showed “unambiguous weakness” in U.S. imports in September. “The question is how you want to interpret that,” he added. “Is this payback from the front running? Or are tariffs starting to have an impact?”
Mr. Setser said that it was too early to answer that question, but that global trade data suggested that U.S. imports could rise again in the next few months, fueled partly by the purchase of foreign computers and chips to build data centers.
I’m going to go with the “payback” thesis, combined with slowing economic activity. First consider the data; it’s not your typical time series import series.
Figure 1: Real imports of goods, seasonally adjusted, in mn.2000$, BoP standard (blue, left log scale), and average effective tariff rate, % (tan, right scale). Source: Census, BLS via FRED, Paweł Skrzypczyński, and author’s calculations.
Imports surged as importers tried to front-run the tariffs, and build up inventory. There’s an obvious surge going from November to March. How big? Quantitatively, pretty large; using a deterministic trend estimated over 2022M11-2024M10, I find the “excess imports” were about 133bn 2000$. Assuming front-running was to account for a year’s worth of imports, then I generate a counterfactual series.
Figure 2: Real imports of goods, seasonally adjusted, (blue, log scale), 2022M11-2024M10 deterministic trend (tan), and counterfactual assuming one year’s worth of imports front-run (red), all in mn.2000$, BoP basis. Source: Census, BLS via FRED, and author’s calculations.
Viewed through this lens, imports have not decreased relative to what we would have otherwise seen. Of course, one year’s worth of import front-running is arbitrary; six months would imply imports are actually running higher than present.
Imports depend on the real exchange rate and income as well as tariff rates. While the real value of the dollar has been pretty constant over the three months before September, income has apparently slowed, relative to pre-Trump. Since imports are highly income sensitive (I estimate 2.2 at quarterly frequency), it would not be surprising to see imports fall because of reduced economic activity, rather than expenditure switching arising from tariffs.
Figure 3: Real imports of goods, seasonally adjusted, mn.2000$ (blue, log scale), GDP in bn.Ch.2017$ SAAR (brown, right log scale). Source: Census, BLS via FRED, SPGMI 9/2 release, and author’s calculations.
Off topic – Pam Bondi, at the behest of the felon-in-chief, is working diligently to criminalize dissent. A few days ago, Reuters reported that Bondi had instructed the FBI to link various types of political dissent to terrorism:
https://www.reuters.com/legal/government/bondi-orders-law-enforcement-investigate-us-groups-over-accusations-domestic-2025-12-05/
The LA Times has also picked up the story:
https://www.yahoo.com/news/articles/justice-department-drafting-list-domestic-110000851.html
It seems Bondi plans to pay bounties for information about anti-fascist activity; taxpayer money will create incentives to accuse fellow citizens of thought crimes. The Stasi had nothing on our Department of Justice.
Bondi’s memo can be found here:
https://www.kenklippenstein.com/p/leak-fbi-list-of-extremists-is-coming
By the way, the First Amendment standard which applies here is Brandenburg v. Ohio, which established a test for overriding free speech protections:
“…the constitutional guarantees of free speech and free press do not permit a State to forbid or proscribe advocacy of the use of force or of law violation except where such advocacy is directed to inciting or producing imminent lawless action and is likely to incite or produce such action.”
https://www.law.cornell.edu/supremecourt/text/395/444
This test is referred to as “imminent lawless action” doctrine and has been in place for the past 56 years.
Speaking of fascism, the Brandenburg in question, whose freedom to incite violence in a non-imminent way was upheld by the Court, was a member of the KKK. The Klan actually exists, has actually committed murder, bombings, arson, beatings and torture. The Klan isn’t mentioned in Bondi’s leaked memo. Nor the Proud Boys, nor any right-wing militia. Antifa is.