WASHINGTON: American businesses are cancelling orders from China, postponing expansion plans and hunkering down to see what trade policy surprises President Donald Trump plans to spring on them next.
The president’s massive and unpredictable taxes on imports seem likely to mean emptier shelves and higher prices for American shoppers, perhaps within weeks.
And the higher costs and paralyzing uncertainty could exact an economic toll: U.S. consumers are in the biggest funk since COVID-19 hit five years ago, and economists say recession risks are climbing.
An early sign of the damage is expected to emerge on Wednesday when the Commerce Department releases its first look at first-quarter economic growth.
The economy is forecast to have expanded at an annual pace of just 0.8% from January through March, according to a survey of economists by the data firm FactSet. That would be the slowest quarter of growth in nearly three years and would be down from a healthy 2.4% in the last three months of 2024. Many economists suspect things were even worse.
Asked how much of deterioration in the world’s biggest economy could be traced to Trump’s erratic policies, Boston College economist Brian Bethune said: “All of it.’’
As he promised on the campaign trail, Trump has upended decades of American trade policy. He’s been imposing — then sometimes suspending — big import taxes, or tariffs, on a wide range of targets. He’s currently plastered a 10% levy on products from almost every country in the world. He’s hit China — America’s third-biggest trading partner and second-biggest source of imported goods – with a staggering 145% tariff.
China has responded with retaliatory tariffs of its own – 125% on American products. The take-no-prisoners trade war between the world’s two biggest economies has shaken global financial markets and threatened to bring U.S.-China trade to a standstill.
