President Donald Trump’s latest whirlwind of tariffs has been shaking Washington and Wall Street for nearly a month, and now, it seems Main Street is about to feel the aftershocks. If the trade war with China continues much longer, the subsequent upheaval won’t just hit shipping lanes – it’ll be knocking on America’s front door.
According to some estimates, since the U.S. ramped up tariffs on Chinese goods to a staggering 145% in early April, cargo shipments have plummeted by as much as 60%. This sharp drop in imports from one of America’s largest trading partners hasn’t yet fully registered with consumers – but don’t get too comfortable. The reckoning is nigh.
By mid-May, thousands of businesses will scramble to restock, from retail behemoths like Walmart and Target to small-town suppliers. Trump, ever the cheerful doom merchant, reportedly told retailers last week that Americans might start seeing empty shelves and eye-watering prices.
Though Trump has made some noises suggesting he might ease these punitive import taxes, the damage may already be baked in. An impending supply shock could ripple through the U.S. economy well into Christmas because nothing says “Make America Great Again” like a festive season without toys or tinsel.
The number of ships sailing from China to the U.S. has plunged, with volumes down 40% from the year’s peak. Even if Trump’s trade tantrum calms down, restarting the transpacific engine could be just as painful. Shipping capacity has already been slashed to avoid a freight price collapse, meaning any sudden surge in demand might jam the system, déjà vu of the pandemic’s chaotic port pile-ups.
Ports are built for steady flows, not wild swings. And indeed, we’re now staring down the barrel of another logistical bottleneck, just in time for Santa’s sleigh to get stuck in customs.
March and April are traditionally when suppliers gear up for the second half of the year – school season, Halloween, and yes, Christmas. But this year, businesses like toy maker Basic Fun! are being paralysed.
Meanwhile, shipping giants like Hapag-Lloyd report a 30% cancellation rate for China-U.S. routes, while Cambodia, Thailand, and Vietnam exporters scramble to pick up the slack. But patching over the hole left by China’s absence won’t be easy, nor cheap. Freight rates are diving, but the sector is bracing for a turbulent restart, with inflationary tremors set to shake consumer confidence further.
The World Trade Organisation has already warned that U.S.-China trade could collapse by as much as 80%, a figure U.S. Treasury Secretary Janet Yellen labelled “essentially a trade embargo.” Economists now see a 50/50 chance of a U.S. recession – a coin toss with the stakes being your job, your shopping bill, or both.
And the irony? While Trump peddles these tariffs as patriotic protectionism, the result might well be empty shelves, rising prices, and a slump just in time for the next election season. After all, nothing screams economic masterstroke like sabotaging your own supply chain in the name of greatness.
As Foreman puts it, this could end up “more perilous” than Covid – except, of course, the solution here is simple: drop the tariffs. However, with Trump, simplicity is never quite so simple.