How Trump’s Tariffs Impact the Economy: China’s Declining Shipments Explained

American businesses are steering away from orders with China and delaying expansion plans. They’re bracing for unpredictable trade policies from President Trump, which could lead to higher prices and reduced product availability in stores.

Recent data shows that consumer confidence in the U.S. is at its lowest since the COVID-19 pandemic began, with signs indicating an increased risk of recession. The Commerce Department’s upcoming report on first-quarter economic growth is expected to reveal a sluggish annual pace of just 0.8%, a steep drop from the 2.4% growth seen the previous quarter.

This deterioration is largely attributed to Trump’s shifting trade policies. Economist Brian Bethune from Boston College suggests that these policies are behind much of the current economic strain. Tariffs have been imposed on a wide range of goods, significantly impacting imports from China, which is America’s third-largest trading partner. For example, a staggering 145% tariff is now placed on Chinese products.

China retaliated with its own tariffs, hitting American goods with a 125% levy. This ongoing trade war has unsettled financial markets and risks halting U.S.-China trade altogether.

Gene Seroka, the executive director of the Port of Los Angeles, recently warned that shipments from China could drop by 35% within weeks. This decline is already reflected in ocean container bookings, which plummeted 60% after Trump’s tariff announcement. As a result, shipping companies have reduced their sailing capacity by 25%.

Companies initially rushed to import goods before the tariffs took effect, creating a temporary stockpile. Judah Levine from Freightos noted that while this inventory could help businesses in the short term, shortages may soon arise, especially in categories reliant on Chinese manufacturing, like furniture and toys.

Judging by consumer reactions, worries are mounting. Nearly one-third of people expect hiring to slow, reminiscent of the Great Recession in 2009. According to economist Joseph Brusuelas, consumer spending—which makes up 70% of the U.S. GDP—could also suffer if people stop shopping. He estimates a 55% chance of recession in the next year, while Torsten Slok from Apollo Global Management sees that risk escalating to 90% if tariffs remain in place.

The impact of these policies isn’t just on economic numbers; real people are feeling the effects. For instance, small businesses like APE Games are contemplating price hikes to cover tariff costs, while toy manufacturers like Basic Fun expect to run out of stock quickly.

Flexport CEO Ryan Petersen emphasizes that while product shortages may not be catastrophic, the looming layoffs resulting from these economic shifts will have a deeper impact. He predicts significant job losses in trucking and retail by late May due to the slowdown in goods movement from China.

Amid all this, some experts suggest that the U.S. and China may need to deescalate the trade war to alleviate concerns. Treasury Secretary Scott Bessent has indicated that the massive tariffs may not be sustainable, hinting at potential policy shifts.

However, economist Cory Stahle warns that consumer behavior could worsen if a recession sentiment takes hold, even as trade policies soften. The coming months will be crucial for both businesses and consumers as they navigate these uncertain waters.

The stakes remain high for the American economy. As consumers continue to react to these changes, the ripple effects on jobs and prices could reshape the marketplace.

Check out this related article: Two Arrested in Bold Theft of Homeland Security Secretary Noem’s Purse: What You Need to Know

Source link

China, International trade, Donald Trump, Scott Bessent, Economic policy, Government policy, Transportation and shipping, Economy, General news, Tariffs and global trade, Business, Brian Bethune, Apollo Global Management, Inc., Naveen Jaggi, Cory Stahle, Torsten Slok, China government, Jay Foreman, COVID-19 pandemic, Jones Lang LaSalle, Inc., U.S. news, Gene Seroka, Recessions and depressions, Kevin Brusky, Joseph Brusuelas, Politics, U.S. News