Trump’s tariffs loom over the economy as shipments from China fall
By PAUL WISEMAN ANNE D INNOCENZIO and CHRISTOPHER RUGABER Associated Press Business Writers WASHINGTON AP American businesses are cancelling orders from China postponing expansion plans and hunkering down to see what contract protocol surprises President Donald Trump plans to spring on them next The president s massive and unpredictable taxes on imports seem likely to mean emptier shelves and higher prices for American shoppers perhaps within weeks And the higher costs and paralyzing uncertainty could exact an economic toll U S consumers are in the biggest funk since COVID- hit five years ago and economists say recession risks are climbing An early sign of the damage is expected to emerge on Wednesday when the Commerce Department releases its first look at first-quarter economic expansion The economic activity is forecast to have expanded at an annual pace of just from January through March according to a survey of economists by the information firm FactSet That would be the slowest quarter of progress in nearly three years and would be down from a healthy in the last three months of A large number of economists suspect things were even worse Urged how much of deterioration in the world s biggest financial sector could be traced to Trump s erratic policies Boston College economist Brian Bethune disclosed All of it As he promised on the campaign trail Trump has upended decades of American exchange framework He s been imposing then sometimes suspending big import taxes or tariffs on a wide range of targets He s at present plastered a levy on products from almost every country in the world He s hit China America s third-biggest trading partner and second-biggest source of imported goods with a staggering tariff China has responded with retaliatory tariffs of its own on American products The take-no-prisoners pact war between the world s two biggest economies has shaken global financial markets and threatened to bring U S -China pact to a standstill Gene Seroka executive director of the Port of Los Angeles warned last Thursday within two weeks arrivals to the port will drop by as essentially all shipments out of China for major retailers and manufacturers has ceased Seroka added that cargo from Southeast Asia also is much softer than normal with tariffs now in place After Trump communicated expansive tariffs in early April ocean container bookings from China to the United States dropped and stayed there explained Ryan Petersen founder and CEO of Flexport a San Francisco company that helps companies ship cargo around the world With orders down ocean carriers have reduced their quota by cancelling of their sailings Flexport stated Multiple companies tried to beat the clock by bringing in foreign goods before Trump s tariffs took effect In fact that is a big reason that first-quarter economic development is expected to come in so low A surge in imports swelled the transaction deficit which weighs on improvement By stockpiling goods ahead of the deal war several companies will be positioned to ride out this storm for a while explained Judah Levine research director at the global freight-booking platform Freightos But at a certain point inventories will run down In the next scarce weeks Levine declared you could start seeing shortages it s likely to be concentrated in categories where the U S is heavily dependent on Chinese manufacturing and there aren t a lot of alternatives and certainly quick alternatives Among them furniture baby products and plastic goods including toys Jay Foreman CEO of toymaker Basic Fun declared he paused shipments of Tonka trucks Care Bears and other toys from China after Trump s tariff plan was broadcasted in early April Now he s hoping to get by for a sparse months on inventory he s stockpiled Consumers will find Basic Fun toys in stores for a month or two but very rapidly we will be out of stock and stock product will disappear from store shelves he explained Kevin Brusky who owns APE Games a small tabletop challenge publisher in St Louis has about copies of three different games sitting in a warehouse in China The tariff bill of about would wipe out his profit on the games so he is launching a Kickstarter campaign next week to help defray the cost of the duties Still his sales representative is urging him to import the games if practicable because he expects that retailers will soon be desperate for products to sell If he does import the games Brusky is considering raising its price from to at least Worried that tariffs will push up prices and drive away customer retailers have put expansion plans on hold for next year explained Naveen Jaggi president of retail advisory services in the Americas for real-estate firm JLL What they are telling us is We want to slow down the decision to open up stores and commit to leases because they want to watch how the consumer reacts Consumers already seem to be freaking out The Conference Board a business group broadcasted Tuesday that Americans confidence in the market system fell for the fifth straight month to the lowest level since the onset of the COVID- pandemic Nearly one-third of consumers expect hiring to slow in the coming months nearly matching the level reached in April when the financial system was mired in the Great Recession Consumer spending accounts for about of U S GDP so if nervous consumers stop shopping the economic fallout could get ugly Economist Joseph Brusuelas of the consultancy RSM pegs the probability of a recession within the next months at Even gloomier is Torsten Slok chief economist at Apollo Global Management He sees a chance of a recession by this summer if Trump s tariffs remain in place Businesses are already planning on major disruptions particularly from the duties on goods from China he disclosed You see that in company reactions Orders are down spending plans are down costs are up prices paid are up he noted He expects large layoffs by trucking firms and retailers as soon as late May as the slowdown in goods coming into U S ports from China works its way through the supply chain Flexport CEO Petersen announced shortages of products are not a tragedy It s going to be much more about the layoffs that follow Petersen mentioned That s where the real pain is going to be felt Shortages mean companies aren t selling stuff and therefore don t have the profits that they need to pay their workers He stated the stakes are so high that he expects the U S and China to deescalate their bargain war and bring down the tariffs In fact Trump and his advisers have sounded more conciliatory lately Treasury Secretary Scott Bessent for example mentioned that the triple-digit tariffs the U S and China have slapped on each other are not sustainable But more abrupt shifts in exchange protocol hazard increasing the uncertainty that has paralyzed businesses and worried consumers Moreover disclosed economist Cory Stahle of the Indeed Hiring Lab conditions may worsen in the coming months if people start behaving like they are in a recession Softening selected of the modern business plan changes may ease particular business concerns but it may already be too late D Innocenzio revealed from New York
