[Text/Observer Network Xiong Chaoyi] The US economy contracted by an annualized rate of 0.3% in the first quarter of this year, but President Trump still insisted that "tariffs are not wrong." The New York Times warned on May 1st that a wave of upheaval triggered by tariffs is hitting the US economy, and a severe impact on American consumers is also on its way.
The report noted that during the COVID-19 pandemic, the closure of Chinese factories and the slowdown of global shipping led to the collapse of many US companies dependent on foreign raw materials, leaving store shelves empty. Now, with Trump's decision to impose extremely high tariffs on China, a similar situation has emerged - most trade between China and the US has stalled, large container ships traveling between Chinese and US ports have become scarce, and the volume of Chinese goods arriving in the US in the coming weeks will decrease.
Some trade experts believe that if the White House quickly adjusts policies and significantly reduces tariffs on China, the US economy and consumers may suffer less. However, for some financially struggling companies, even if the Trump administration lowers tariffs on China, it remains questionable whether restarting trade with China makes sense, as these companies have already been forced to shut down.
After the cabinet meeting on April 30th, Trump also admitted that his tariff policy and the trade war against China could soon lead to some shelves in stores being emptier than usual, especially in toy stores.
Molson Hart, CEO of American toy consumer company Viahart, wrote on the social platform X: "It's almost like we're speeding towards a brick wall, but the driver hasn't seen it yet. By the time he sees it, it will be too late to brake."
On May 1st, drone footage showed the situation of Chinese containers parked at the Port of Los Angeles. Reuters
The New York Times pointed out that although the high tariffs imposed by the US on China began to take effect in early April, the availability and prices of Chinese goods have not changed much yet. However, some businesses have already started raising prices, and experts believe that the greater impact will become more evident in the coming weeks as Chinese factories cancel orders.
The reason American consumers have not yet felt these effects is that it takes 20 to 40 days for a container ship to cross the Pacific Ocean. This means that the impact of the high tariffs on China implemented in early April is only now starting to manifest in the reduction of incoming cargo ships to the US, and this trend will intensify.
By late May or early June, American consumers may begin to see empty shelves in stores, and retailers and logistics industries may lay off workers. Torsten Slok, an economist at Apollo Global Management, said that the major impact of cutting trade with China on the US economy will begin to appear in the summer of 2025, potentially leading to a recession.
"American consumers will soon see empty shelves in clothing stores, toy stores, hardware stores, and retail pharmacies, and prices on those shelves will rise," he stated.
In addition to imposing high tariffs on China, the US will also terminate the tax-free treatment for small packages imported from mainland China and Hong Kong starting May 2nd. At that time, the decline in imports from China will further expand, and American consumers will face higher commodity prices, while some airlines and logistics companies dependent on small shipments will also be affected.
Port workers and logistics companies anticipate the difficulties they will face. The Port of Los Angeles is the main entry point for Chinese products into the US, and in recent months, due to businesses and consumers trying to stock up before the tariffs took effect, import volumes surged. However, import volumes have now begun to decline.
Port data shows that the number of containers expected to arrive next week at the Port of Los Angeles will fall by more than 35% compared to last year. Gene Seroka, executive director of the port, said that due to insufficient throughput, one-quarter of the ships scheduled to depart in May this year have been canceled, and since about two weeks ago, the flow of goods entering the port from China has become "very rare."
Data also shows a significant drop in heavy truck sales, indicating that logistics companies expect the volume of transported goods to decrease in the future.
Trade experts say that over the past few months, major companies have accumulated large inventories. If the White House quickly changes policies and significantly reduces tariffs on China, most of the pain for the US economy and consumers can be avoided. Data from the Institute for Supply Management shows that current inventory levels of goods in the US are at their highest in over two years.
Gabriel Wildau, managing director of Teneo, which provides consulting services for US-China trade, said that the Chinese goods hoarded by US retailers in the first quarter will give stores some buffer time before prices rise. But he said that if this situation does not change quickly, American consumers will feel the impact of trade changes within the next three to six months. "We will face higher prices, and in some cases, shelves will be empty."
Officials in the Trump administration acknowledged that consumers may face some disruptions. After the cabinet meeting on April 30th, Trump also admitted that his trade policy might lead to a reduction in goods and rising prices.
"Some people say 'shelves will be empty,' maybe children will only have two dolls instead of 30? Maybe these two dolls might be a few dollars more expensive," he said, adding that his tariff policy and the trade war against China might soon result in some shelves in stores being emptier than usual, especially in toy stores.
However, Treasury Secretary Yellin insisted the day before (April 29th) that he expects the tariffs imposed by the US on China will not disrupt supply chains. He said: "I think retailers have managed their inventories well beforehand."
But the reality is that some financially vulnerable companies cannot afford to build reserves and are rapidly being forced to close. Even if the Trump administration finds ways to reduce tariffs on China, it remains unclear whether the reduction will be enough to meaningfully restart trade.
Many companies said that imposing tariffs of more than 50% on Chinese imports has been enough to completely stop trade. With the current tariff at 145%, it means that the Trump administration may need to reduce tariffs on China by at least 100 percentage points to truly restart the flow of goods.
On April 30th, the New York Stock Exchange. Due to data showing a contraction in the US economy in the first quarter and a decline in business confidence, stocks fell sharply after the opening on the last trading day of April.
The New York Times said that due to such uncertainty in global trade, many companies are freezing expansion plans, stopping new orders. Data shows a significant decrease in new orders from manufacturers this year, and companies are cutting capital expenditure plans. Some large companies have stopped issuing sales and profit forecasts. It remains unclear how quickly the supply chain crisis can be resolved, but during the pandemic, the impact of supply chain disruptions on the economy has been much longer than most forecasters expected.
Previously, the US economy did not recover smoothly after the pandemic. Americans saw cargo piles at ports and shortages of some goods, all of which ultimately led to price increases.
Ryan Petersen, CEO of supply chain company Flexport, said that companies operating container ships have canceled one-quarter of their trips from China to the US, changing routes to Southeast Asia and Europe. Even if the Trump administration cancels tariffs on China, and US consumer demand for Chinese products recovers, ships will not immediately return to their original routes to carry the same volume of goods.
"You will see price hikes, you will see delays," Petersen added. "The longer you wait for policy adjustments, the more severe the impact will be."
According to a May 2nd notice on the Ministry of Commerce website, the spokesperson for the Ministry of Commerce answered questions regarding Sino-US economic and trade dialogue and consultations. The spokesperson noted that China noticed multiple statements by senior US officials expressing willingness to negotiate tariffs with China. Meanwhile, relevant US parties have recently communicated through various channels, hoping to start talks with China. China is currently evaluating this.
China's position remains consistent: if the US insists on confrontation, China will respond in kind; if the US wishes to negotiate, the door remains open. The trade war initiated by the US was unilaterally launched by the US side. If the US wants to talk, it should demonstrate sincerity. It must be prepared to correct mistakes, cancel unilateral tariff hikes, and take action. We noticed that the US has been sending signals about adjusting tariff measures. China emphasizes that in any potential dialogue or negotiation, if the US does not correct its erroneous unilateral tariff measures, it indicates that the US lacks sincerity and will further damage mutual trust. Making promises without action, or even attempting to use negotiations as a pretext for coercion and extortion, will not work with China.
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Original source: https://www.toutiao.com/article/7499684541800432147/
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