Picture this: AI rush sparks massive increase in US high-tech imports

What we know

• The US trade deficit increased by $2.7 billion to $57.3 billion in February, as imports increased more than exports. The nominal goods deficit widened by $2.5 billion to $84.6 billion, while the services surplus fell by $0.2 billion to $27.3 billion.
• Imports became more volatile after tariff rates were raised last April, leading to large swings in imports and exports of gold and pharmaceutical products.
• In February, real goods imports increased by $7.6 billion, or 3.2%. Nominal goods imports jumped by $14.0 billion to $291.5 billion, led by three high-tech categories: computers, computer accessories, and semiconductors, which, combined, shot up by $8.0 billion. Imports of industrial supplies and materials, autos, and consumer goods were also up in February.
• Tariff revenue totaled $21.2 billion in February, down from $25.6 billion in January. The effective tariff rate decreased from 9.9% in January to 8.5% in February.
• The trade balance has improved slightly over the past year. Whether this reflects tariffs, a weaker dollar, or several factors is unclear.

Why it matters

GDP implications (first quarter: up 0.4 percentage point). Both exports and imports were stronger than expected through February, with the balance suggesting somewhat weaker first-quarter net exports. Furthermore, net imports of capital goods, mainly computer and peripheral equipment, were considerably stronger than expected, implying more first-quarter equipment spending. As a result, we raised our tracking forecast of first-quarter GDP growth to 2.3%.