Chicago Fed President warns: Trump's tariff policy may lead to a summer plunge after an "artificially high" economy

American business owners and CEOs have begun stockpiling inventory, and some American consumers are also panic-buying high-priced goods in preparation for President Donald Trump's possible tariff policy. Chicago Federal Reserve Bank President Austan Goolsbee said this sudden rush of panic buying could lead to "artificially high" levels of economic activity.

"This precautionary buying may be more obvious on the business side," Goolsbee said on a show on Sunday, adding: "We hear a lot about precautionary inventory building, which may last for 60 days, 90 days if there is more uncertainty in the future."

Goolsbee pointed out that business stockpiling and consumers accelerating purchasing decisions - such as buying Apple iPhones now instead of waiting until the fall - may push up U.S. economic activity in April and lead to a slowdown in the coming months. “Initially activity may look artificially elevated, and then it may fall by the summertime — because people have bought everything,” he said.

Goolsbee said industries affected by Trump’s tariffs, especially the auto industry, are most likely to stockpile inventory now if import tariffs on goods from other countries rise further. For example, many auto parts, electronic components, and other high-priced consumer goods are made in China, which currently faces a total tariff rate of 145% when imported into the United States.

Trump’s tariffs on many other countries are currently on a 90-day suspension, replaced by a flat 10% base tariff rate on all imports. The suspension expires on July 9, and Trump has boasted of a series of tariff rate negotiations with foreign leaders during that period. “After 90 days, when they revisit the tariffs, we don’t know how high they’re going to be,” Goolsbee said.