Trump tariffs could lead to a summer drop-off in economic activity after an ‘artificially high’ start, Chicago Fed chief says

Austan Goolsbee, the President and CEO of the Federal Reserve Bank of Chicago, addressed the Economic Club of New York in New York City on April 10, 2025.

According to Goolsbee, business owners and CEOs are starting to increase their inventories, and some American consumers are panic buying expensive items in preparation for President Donald Trump’s tariffs. This sudden surge in purchases could lead to a “temporarily inflated” level of economic activity, as noted by Goolsbee.

Speaking on CBS’ “Face The Nation,” Goolsbee mentioned that businesses are particularly engaging in preemptive inventory building, with reports of stockpiling lasting up to 60 or 90 days due to increased uncertainty. This behavior, along with consumers making early purchasing decisions, such as buying Apple iPhones sooner rather than later, may artificially boost economic activity in the upcoming month but could result in a slowdown later on.

Goolsbee highlighted that industries affected by Trump’s tariffs, such as the auto sector, are likely to amass inventory to avoid potential further import levies on goods from other countries. With tariffs on hold for 90 days, Trump is engaged in negotiations to determine future tariff rates.

Despite the short-term challenges caused by the tariffs, Goolsbee expressed confidence in the country’s long-term economic prospects. He emphasized that the economic indicators in April were positive, with stable employment rates and decreasing inflation, fostering optimism for the future.

Moreover, U.S. business owners who rely on goods from China are facing difficulties due to the high tariffs. Matt Rollens, owner of a novelty drinkware company, is withholding product orders from China to avoid passing on the increased costs to consumers.

Looking ahead, Goolsbee believes that overcoming current obstacles is essential to prevent a return to the economic turmoil of previous years.