Higher tariffs and more restrictive U.S. trade policies are reshaping global trade flows and adding to cost and inflation pressures. A year and a half into this shift, trade deficits remain elevated, raising questions about the effectiveness of the current trade strategy. Meanwhile, trading partners are increasingly looking beyond the U.S. for the goods they need, weakening long-standing economic ties. As a result, the U.S. can no longer be counted on as the global purchaser of last resort.

Despite these trade headwinds, demand for artificial intelligence-related investments continues to support imports of capital goods, providing a bright spot amid rising costs and shifting global trade relationships.

Also in this issue, RSM examines how food companies use AI to improve efficiency and what back-to-school shopping trends signal for the holiday season. Value-conscious consumers are prioritizing promotions and purchase timing, while holiday sales growth will likely reflect higher prices rather than stronger demand.

The current strategy to rebalance global trade in favor of Washington has been slow to produce concrete results. The overall deficit has widened and the trade taxes imposed on U.S. companies are being passed along to customers, resulting in higher inflation.

Joe Brusuelas, Chief Economist, RSM US

Finally, in the Market Minute series, RSM explores declining U.S. agricultural market share and examines homeownership amid 7% mortgage rates.

Read our global team’s analysis of these topics in the latest edition of The Real Economy.