NEW YORK— United States imports and exports soared in January, reflecting that both foreign and domestic demand is strong despite rising interest rates.

The trade deficit increased 1.6% over December and reached $68.3 billion, according to data released Wednesday by the Department of Commerce. Exports grew by $8.5 billion, a 3.4% monthly increase, mainly due to consumer goods such as pharmaceutical drugs and automobiles. Imports rose $9.5 billion, up 3% month-over-month, driven by consumer goods such as cell phones, toys, electronic equipment, and also autos.

The increases in imports and exports were the largest since April 2022, a month after the start of the war in Ukraine, to find similar figures. But this could start to change soon, as the effects of the increase in the interest rate begin to be felt in the wallets of households and the strength of the dollar weakens the competitiveness of American products.

The spike in foreign trade in January has exceptional and largely unrepeatable reasons, according to economists. These include an 8.7% rise in Social Security benefits to adjust to the escalating cost of living, bonuses paid by companies due to the difficulty they had retaining workers in tight labor market conditions, and a surprising employment gain. There were 517,000 new jobs, more than twice the expected numbers. All those factors gave Americans money to spend on imported goods.

"We saw an unusual increase in imports and an unusual increase in exports. I am suspicious that it will not continue," said Hugh A. Johnson, economist and chairman of Hugh Johnson Advisors. "Consumer spending was strong, not in small part due to some non-recurring events."

The strength of the economy, however, could induce the Federal Reserve to adopt tougher monetary policies and to keep interest rates higher for longer. That, in turn, will reduce consumer spending, which translates into lower demand for imported goods. Higher rates will also strengthen the U.S. dollar, which makes American products more expensive and tends to reduce exports. As a result, some economists believe that international trade will slow down in the coming months, but this process may take time.

A higher interest rate will reduce consumer spending and that translates into lower demand for imported goods, while a stronger dollar makes American products more expensive and tends to reduce exports. As a result, some economists believe that international trade will slow down in the coming months, but this process may take time.

"We are not probably going to see that until the effect of interest rate rises is more clearly felt within the economy," said James Knightley, chief international economist at ING Financial Markets. “As we move through the year, we will see the demand for foreign-made goods starts to weaken.”

Exporting less and importing more as the dollar strengthens is what John Hannah expects. Hannah is president of Pacific Valley Foods, a company based in Bellevue, Washington, and dedicated to importing and exporting food. His firm, however, was unable to take advantage of high domestic demand in recent months due to a global shortage of frozen potatoes, a product that they import from Belgium. “Global demand is increasing at 5% annually while production capacity has not grown fast enough”, explained Hannah. "Our imports would increase if we could get more product.”

Despite the strong foreign trade performance in January, many executives are concerned about the economy and uncertain about the future.

This is the case with Pneumatic Vacuum Elevators (PVE), an elevator manufacturer based in Miami, Florida, that imports industrial inputs from different countries. The company’s business is affected by what is happening in the real estate sector, one of the markets hardest hit by rising borrowing costs, said Stephan Gruber, the company’s vice president.

There are other factors working in the company’s favor, he said, such as the home office boom, which is making more people interested in their products. But the company is being careful.

"Our imports have increased over the past three months, but we are cautiously optimistic," said Stephan Gruber said. "We always take a cautious approach to what is going on in the world. And that is why 21 years later we are still in business."