The US GDP grew at an annualized rate of 3.5 percent in the third quarter, according to a government report Friday, but various news reports pointed out the negative affect trade had on the figure. The contribution of net exports of goods and services, which measures how much trade added or subtracted to GDP growth, was -1.78 percentage points—the largest negative contribution to GDP growth for trade in 33 years. To put it in context, if trade were a net neutral, third-quarter GDP growth would have been 5.3 percent.
Additionally, nonresidential fixed investment, which measures spending on high-priced items such as equipment, added only 0.12 points to GDP growth, the lowest in seven quarters. Overall fixed investment, meanwhile, was -0.04 points, the worst in 10 quarters.
Further, companies have reported that trade uncertainty and the possibility that tariffs will push up costs elsewhere could result in decreased capex spending. The Federal Reserve’s latest Beige Book features several concerns about possible costs from the tariffs, with several major corporations, including Tesla and 3M, estimating that the tariffs will add tens of millions of dollars to their costs going forward.