President Trump is a man in a hurry. During his election, he argued that “tariff is the most beautiful word in the dictionary”. And he has wasted little time in his aim of turning the world’s trading system upside-down.
Now the US is about to face the consequences of his policies. US trade flows are starting to tumble as the chart shows, based on data from Vizion:
- “Booking volumes from the last week of March to the first week of April across global and U.S. trade lanes plummeted
- “There were sharp decreases in bookings across several categories, including apparel & accessories; and wool, fabrics & textiles, both down over 50%”
Major product categories from China that are moved in containers include apparel, toys, furniture and sports equipment, all of which are subject to steep tariffs.
WTO SLASHES 2025 TRADE GROWTH, WARNS OF DEEPER SLUMP
The World Trade Organisation is already warning that trade is now set to decline in 2025, as Reuters reports:
“If we have contraction in global merchandise the concern is spill over into broad GDP growth. We’ve seen that the trade concerns can have negative spill overs into financial markets, into other broader areas of the economy.”
Even with recent exemptions for smartphones, the WTO suggests merchandise trade between China and the US will fall by 81%.
The major risk, of course, as we have long warned, is that today’s relatively open trading system disappears. Instead, we move to regional trading blocs.
RETAILERS WARN POLICIES ARE DISRUPTING SUPPLY CHAINS
CEOs are generally reluctant to challenge Presidents. They prefer a quiet life, focused on running their business.
But last week, as Axios reports, the CEOs of 3 of the largest US retailers told Trump that:
“His tariff and trade policy could disrupt supply chains, raise prices and empty shelves.”
The warning came in a private meeting with the heads of Walmart, Target and Home Depot.
They suggested the disruptions would become obvious in early May – only 2 weeks away.
Shipping and logistics companies are, of course, first in line to feel the pain. They are at the start of the value chain, and have to react quickly when volumes start to crater.
Port Optimizer data shows a 44% drop in expected arrivals in the first week of May, versus 2024. And shippers have already cancelled, or blanked, 80 sailings out of China due to lack of shipments.
US trucking volumes are, so far down 8% month-on-month. This is potentially serious news for the 3.5 million US truck drivers and the 8.5 million people employed in the trucking industry.
And now, their customers are also starting to worry, as Bloomberg reports:
“The Federal Reserve’s regular Beige Book, a collation of anecdotes and observations from the different branches’ contacts with business, illustrates the problem neatly. The latest, published Wednesday, is dominated by the uncertainty created by tariffs.
Oxford Economics keeps this handy breakdown of the themes that dominate each edition. While tariff uncertainty persists, the risk is that it will so inhibit businesses as to drive the economy into an unnecessary recession.”