Trump's prices are looming on the economy as the expeditions of China fall

The American companies of Washington (AP) cancel orders from China, postponing expansion plans and repressed to see what the commercial policy surprises President Donald Trump plans to browse them afterwards.

The presidents of massive and unpredictable taxes on imports seem likely to signify more lively shelves and higher prices for American buyers, perhaps in a few weeks.

And higher costs and paralyzing uncertainty could require an economic assessment: American consumers have been in the largest funk since Covid-19 struck five years ago, and economists say that the risks of recession are climbing.

An early sign of damage emerged on Wednesday when the Commerce Department published its first overview of economic growth in the first quarter.

The US economy decreased by 0.3% from January to March, the first decrease in three years. Gross domestic product The production of the nations of goods and services is down 2.4% in the last three months of 2024. Imports have shaved 5 percentage points on the growth of the first quarter. Consumer expenses have also slowed down suddenly.

In addition, a report by the ADP payroll supplier has shown that companies had added only 62,000 jobs in April, about half of what was expected and down 147,000 in March. It is a potential signal that companies can adopt a more cautious approach for hiring in the midst of uncertainty on prices.

Asked about the quantity of deterioration of the greatest economy in the worlds, the greatest economy could be attributed to erratic policies, the economist of the Boston College Brian Bethune said: all this.

As he promised on the campaign campaign, Trump has turned upside down decades of American trade policy. It was therefore imposing to sometimes suspend large import taxes or prices on a wide range of objectives. He has currently plastered a 10% levy from the products of almost all countries of the world. He struck the third trading partner in the Americas in China and the second largest source of imported goods with an astonishing rate of 145%.

China responded with prices for reprisal of its own 125% on American products. The trade war of the primeurs between the two largest economies rocked the world's financial markets and threatened to put American-Chinese trade.

Gene Seroka, executive director of the port of Los Angeles, warned last Thursday in the two weeks of arrivals to the port will drop by 35%, because all the expeditions of China for large retailers and manufacturers have ceased. Seroka added that the Southeast Asian cargo is also much softer than normal with prices now in place.

After Trump announced large prices in early April, Chinese ocean container reservations in the United States fell by 60% – and stayed there, said Ryan Petersen, Founder and CEO of Flexport, a San Francisco company that helps companies ship cargo worldwide. With declining orders, ocean carriers have reduced their capacity by announcing 25% of their navigations, said Flexport.

Many companies have tried to beat the stopwatch by bringing foreign products before Trumps, the prices took effect. In fact, this is a great reason why the economic growth of the first quarter should be so low: an increase in imports has swelled the trade deficit, which weighs on growth.

By storing goods before the trade war, many companies will be positioned to browse this storm for a certain time, said Judah Levine, research director of the World Freightos Freight Reservation Platform. But at some point, stocks will extend.

In the coming weeks, said Levine, you may start to see shortages … It is likely to be concentrated in the categories where the United States depends heavily on Chinese manufacturing and there are many alternatives and certainly rapid alternatives. Among them: furniture, products for babies and plastic products, including toys.

Jay Foreman, CEO of Toyaker Basic Fun, said that he had interrupted the expeditions of Tonka trucks, Care Bears and other China toys after the announcement of the Trumps pricing plan in early April. Now he hopes to manage for a few months on the inventory that he is stored.

Consumers will find basic fun toys in stores for a month or two, but very quickly, we will be out of stock and stock products will disappear from stores, he said.

Kevin Brusky, who owns Ape Games, a small table publisher in St. Louis, has about 7,000 copies of three different games sitting in a warehouse in China. The pricing bill of around $ 25,000 would eliminate his profit on games, so he launches a Kickstarter campaign next week to help defray the cost of tasks.

However, his sales representative asks him to import the games if possible, because he expects the retailers to soon be desperate that the products are sold. If there is no games, Brusky plans to spend its price from $ 40 to at least $ 45.

Worried that the prices increase prices and distance customers, retailers have suspended expansion plans for next year, said Naveen Jaggi, president of detailed consulting services in the Americas for the real estate company JLL. What they tell us is: we want to slow down the decision to open stores and commit to rent because they want to see how the consumer reacts.

Consumers already seem to panic. The Conference Board, a group of companies, reported Tuesday that the confidence of the Americans in the economy has dropped for the fifth consecutive month at the lowest level since the start of the Pandemic COVVI-19. Nearly a third of consumers expect hiring to slow down in the coming months, almost corresponding to the level reached in April 2009, when the economy was mired in the great recession.

Consumer expenditure represents around 70% of American GDP, so if nervous consumers stop shopping, economic benefits could become ugly. The economist Joseph Brusuelas of the Consulting Society RSM sins the probability of a recession in the next 12 months at 55%.

Even darker is Torsten Slok, chief economist at Apollo Global Management. He sees 90% of recession by this summer if the prices prevail over the prices. Companies are already predicting significant disruptions, in particular from 145% rights over China goods, he said.

You see that in the company's reactions: orders are down, plans (expenses) are down, costs are increasing, the prices paid are increasing, he said.

He awaits major layoffs by trucking companies and retailers from the end of May, because the slowdown in goods entering the American ports from China is making a path through the supply chain.

Flexport CEO, Petersen, said that products of products are not a tragedy.

It will be much more about the following layoffs, said Petersen. This is where the real pain will feel. The shortages mean that companies do not sell things and therefore do not have the benefits they need to pay their workers.

He said that the issues are so high that he expects the United States and China to descend their trade war and reduce prices. In fact, Trump and his advisers have come more conciliation lately. Treasury secretary Scott Bessent, for example, said that the three-digit prices that the United States and China are slapped are not durable.

But more abrupt changes in the risk of commercial policy increasing the uncertainty that has paralyzed worried businesses and consumers.

In addition, said economist Cory Stahle of the job laboratory, in fact, the conditions can worsen in the coming months if people are starting to behave as if they were in recession. The softening of some of the recent trade policy changes could facilitate certain commercial concerns, but it can already be too late.

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Dinnocenzio reported in New York

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