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As the final Chinese cargo ships loaded before the Trump administration’s steep tariff hikes reach US shores, economists and businesses are bracing for a seismic impact on prices, jobs and supply chains.
The 145% tariffs imposed on Chinese imports in early April have not yet fully hit consumers or retailers, largely due to shipping lag. But that grace period is ending. Though US consumers have not yet fully felt the pinch, that’s about to change. Goods on ships that departed China after April 9 are now beginning to reach American shores, carrying steep cost increases that could ripple through the economy.
With ocean transit from China taking up to 40 days, the goods arriving now are among the last to escape the new tariff regime—and with fewer ships at sea, the economic ripples are expected to become waves.
A slowdown underway
Shipping activity between China and the United States has plummeted. According to CNN, sailings from China to the US dropped 60% in April, with many vessels idling at Chinese ports as demand collapses.
Gene Seroka, executive director of the Port of Los Angeles, told CNN that cargo arrivals were already down 35% year-over-year. “Many major retailers have told us they have about a six- to eight-week supply of inventory in their systems now,” he said. “After that, we’re going to see some difficult decisions.”
Retailers sound the alarm
Retail giants including Walmart, Target, and Home Depot warned President Trump last week that inventories could soon run dry, Bloomberg reported. For smaller businesses without the ability to absorb cost shocks or stockpile inventory, the challenge is more acute.
Jonathan Gold of the National Retail Federation told CNN, “Especially for small retailers who can’t absorb any of the tariff impact, they’re trying to figure out what their next steps are.”
Impact Shorts
More ShortsThe impact is likely to be uneven. More than two-thirds of investors surveyed by Bloomberg believe retail stocks will suffer the most, followed by technology. According to Gartner, 45% of supply chain leaders plan to pass on higher tariff costs directly to consumers.
“There’s a lot of concern,” said Gold. “Retailers are in the process of trying to figure out their back-to-school and Christmas orders, and how and when they’re going to place those.”
Economic headwinds building
Early signs of trouble have already appeared in GDP data. According to Bloomberg, the US economy contracted in Q1 for the first time since 2022. While some of that may reflect front-loaded imports, economists warn the worst is yet to come.
“The data is noisy, but directionally consistent with what you would expect if US-China tariffs amount to a de facto trade embargo,” Jake Schurmeier of Harbor Capital Advisors told Bloomberg. “GDP tells us about the pull forward of demand, not about the potential for a collapse in demand from tariffs.”
Apollo economist Torsten Slok told The New York Times that the consequences will become more visible by summer, potentially tipping the US into recession.
Jobs and logistics under pressure
The impact is not limited to consumers. As CNN reports, a drop in imports threatens the livelihoods of truckers, warehouse workers, and dock staff. “I don’t see mass layoffs at the port,” Seroka said, “but I do see that a trucker who’s hauling four or five containers today likely will be hauling two or three after next week.”
Chris Spear, president of the American Trucking Associations, told CNN that tariffs could raise equipment costs by up to $35,000 per truck and warned of a $2 billion tax burden on small carriers.
UPS, long seen as a bellwether for the broader economy, declined to update its financial guidance, citing macroeconomic uncertainty, Bloomberg noted.
No quick fix
Some companies are shifting sourcing to Vietnam, Malaysia, and Southeast Asia, but supply chain leaders caution that such moves take time. “It takes months if not years to establish these new relationships,” Gold told CNN. “It’s not something that can happen overnight.”
While Trump paused some global tariff expansions shortly after his April 2 announcement, the current China tariffs remain in full force. “Although the recent reversals reduce some of the tail risk to the global economy, the tariff package that remains in place is massive,” economists at ABN Amro told Bloomberg. “The unusually large trade-policy related uncertainty remains, which by itself hurts growth.”
Looking ahead
By late May or early June, consumers are expected to see higher prices and less product variety on store shelves. “So, if you’re looking for a certain type of pants, you may find all kinds of pants, but not the type you want—and the type you want… is going to be priced up,” Seroka said to CNN.
Flexport CEO Ryan Petersen was blunter: “If this goes on for a few more weeks, [retailers will] sell through that inventory, and by the summertime, you’ll have shortages and empty shelves,” he told CNN.
As the last pre-tariff ships dock, America’s economy is heading into turbulent waters. Whether this standoff yields to negotiation or deeper economic damage remains to be seen.