5 Things Worth Knowing About Trade Before Fed Votes On Interest Rates

Core Points - The Federal Reserve is facing a dilemma between a weakening job market that supports lower interest rates and rising inflation that suggests maintaining or increasing rates [3][19] - The upcoming decision on interest rates will be influenced by missing data due to the U.S. government shutdown, particularly merchandise trade data from the U.S. Census Bureau [4][19] - The value of tariffs collected by the Treasury has quadrupled as a percentage of total imports within four months, indicating significant changes in trade dynamics [5][16] Trade Data Impact - The impact of new tariffs that went into effect in August is unknown due to the lack of released data, which is critical for understanding their immediate effects on trade [6][10] - Countries accounting for 18.61% of U.S. trade are subject to these new tariffs, and their effects on trade patterns remain to be seen [7][10] - The end of the de minimis exemption, allowing tariff-free imports valued under $800, has led to a surge in low-value shipments, particularly from China, totaling $16 billion in July [11][10] Trade Deficit Concerns - The U.S. trade deficit may have exceeded $100 billion for the fifth time in the first eight months of the year, raising questions about the effectiveness of tariffs [12][13] - A sudden drop in the trade deficit could provide comfort to the Fed, while another month above $100 billion could influence their decision-making [13][19] - The Supreme Court's expedited decision on the constitutionality of tariffs may impact the Fed's economic decisions, as they lack critical data [14][19] Import Anomalies - Three primary import anomalies contributing to the large U.S. trade deficit include gold, computer servers, and pharmaceuticals, which could change and affect the economy [15] - The tariff revenue as a percentage of total imports has increased from 2.3% to over 10%, indicating a significant rise in trade costs [16][17] - The August data will not include most tariffs against major trade partners, which represent nearly 40% of U.S. trade, complicating the Fed's analysis [18][19]