After a near decade high in February, the U.S. trade deficit fell in March, but mostly because of a spike in service imports from the 2018 Winter Olympic Games.

The trade gap narrowed to $49 billion in March, falling $8.8 billion from $57.7 billion in February. Imports fell $4.6 billion to $275.5 billion in March. Meanwhile, exports increased by $4.2 billion to $208.5 billion.

The U.S. had a larger services surplus in March, which increased $1.3 billion to $20.5 billion. However, this was a return to form, since service imports in February included licensing fees to broadcast the 2018 Winter Olympic Games.

Since the Olympic Games is a one-time event, the trade deficit is expected to continue its upwards trend through the rest of the year. While President Donald Trump seeks to use tariffs as a way to reduce the trade deficit, a tightening labor market and stronger wage growth is expected to accelerate consumer spending for the rest of the year, resulting in stronger imports.

“The trend will move towards a widening of the deficit,” said Ryan Sweet, an economist at Moody’s Analytics.

The widening of the trade deficit in late 2017 and early 2018 was also driven in part by high consumer spending in retail and autos. That spending weakened in March, resulting in the smaller deficit.

“We have a bit of a consumer spending hangover,” Sweet said.

While the growing trade deficit will be a drag on gross domestic product, a broad measure on the country’s economy, gains in imports are an indicator that consumer demand is strong and that the domestic economy is doing well. “It’s a double-edged sword,” said Sweet.

That is a cause for concern in the ongoing talks of trade wars between the U.S. and China. As the U.S. imposes and proposes tariffs on imports, it will affect manufacturers, such as automakers for steel and aluminum, and homebuilders for lumber.

“If the aim is just to reduce the deficit by focusing on imports, that’s problematic, because imports are very important to the supply chain, especially for manufacturers,” Sweet said.

Though they loom large in the public discussion, the effects of tariffs are not yet visible in the trade data and are not yet felt in the larger economy. However, they are already affecting the prices of steel and lumber, which have increased.

“That’s most likely influenced people’s management of inventory,” said Michael Moran, chief economist at Daiwa Capital Markets. For U.S. industries that rely on foreign imports of steel or lumber to produce their products, tariffs disrupt the supply chain, forcing them to buy higher priced goods or search elsewhere.

“It makes it that much more difficult to get the goods they need,” said Sweet.

For the Compton Lumber Company, a family business more than a century old in Seattle, Washington, that has meant that business owners have had to scramble to find hardwood plywood from elsewhere after Chinese imports of the product got a nearly 200 percent tariff in November. The company sells mostly hardwoods.

“It’s got a really great price, that’s something we’ve had for years, and now it’s been eliminated,” said Michael Matheny, 66, sales manager at Compton Lumber.

Matheny, who has been with the company for 41 years, said Compton Lumber’s vendors are building lumber mills in other countries, like Malaysia, Vietnam and Cambodia. In the meantime, the company has raised prices by 10 percent across the board on all products.

“Everything has gone up in this whole market,” Matheny said.

In Seattle, where lumber was once king and where the real estate market is running hot, tariffs have not yet had a huge impact outside of prices. And for the moment, the increase in prices is not likely to hurt Compton Lumber’s business.

“It’s kind of like the price of milk, you’re going to have to have it,” said Matheny. “People are always going to be needing building materials.”

However, Matheny hopes the prices do not go up too high, too fast, to a point where people will stop buying his product.

“There’s hills and valleys, and right now we’re on a hill,” said Matheny. “I don’t know how fast we’ll head into a valley.”