People buying and selling goods and services within the US are contributing to the GDP. If some people take some of that money they would've spent domestically and instead use it to import extra stuff (which doesn't count towards GDP), the GDP will go down.
Most of the value of an iPhone is recorded as American GDP because American IP and software went into it, Apple is keeping a lot of the price for the phone, and only sending a bit off to China for assembly (and a larger bit off to South Korea, Japan, and Taiwan for components that China is assembling). What remains is still a lot of American GDP.
A small business who is contracting China to make the thing that they then sell is also generating a lot of GDP. Yes, they send some percent off to China to make the thing, but a majority is GDP generated here in the USA (the small business does the design, marketing, sales, etc...). If they go belly up because of the trade war (very likely, since no one else can make their thing, and before China developed this capability, making the thing wasn't even possible!), that GDP is gone, the people that small business was employing are unemployed.
The increased purchases should not decrease American GDP, unless consumers are buying directly from China using Temu and are not buying at Walmart.
Yes, selling things contributes to GDP. But importing things does not. If you take money that you would've spent buying something in the US and use it to import something that you haven't sold yet, you've decreased GDP wrt the counterfactual.
Its not just selling things, it is designing those things, marketing those things, writing the software for those things, all of that is high value stuff that Trump is basically ignoring. There is a good reason we got richer after China entered the WTO rather than poorer: we focused on high value goods, IP, and services, which was only possible because we were able to outsource low value assembly to China.
If you take that money you would have spent buying something in the US that has imported parts (like its assembly), and instead say go out and by a DJI drone on TEMU, yes, you've decreased GDP. If you simply have no money to buy anything because DOGE decided to cut your federal job, then that would also decrease GDP.
I see where I got this wrong now: companies are stocking up on imports, but the GDP for those imports don’t go positive until they are sold to consumers (then whatever the sale price differs from the import price).
