What deterioration in the world’s largest economy could be found in Trump’s policies? “All this,” says an economist

Washington (AP) – North -American companies annul China’s orders, postpone expansion plans and abandon to see what trade policy surprise by President Donald Trump, who is nearing.

President’s massive and unpredictable taxes on imports seem to suppose more empty shelves and higher prices for North -Americans, perhaps in a few weeks.

And the highest costs and the paralysis of uncertainty could accurate an economic toll: American consumers are in the largest funk since Covid-19 won five years ago and economists say that the risks of recession are to go up.

An early sign of the damage came on Wednesday when the Department of Commerce published its first look at the economic growth of the first quarter.

The US economyreduced 0.3% from January to MarchThe first fall in three years. Gross national product (the production of goods and services of the country) dropped by 2.4% in the last three months of 2024. Imports shaved 5 percentage points of the first quarter growth. Consumer spending is also slowed.

Separately, a report from the ADP payroll provider showed that companies added only 62,000 jobs in April, about half of what was expected and dropped from 147,000 in March. It is a potential signal that companies can take on a more prudent approach to hiring in the midst of uncertainty about rates.

Asked about the amount of deterioration in the world’s largest economy, Trump’s misconception could be found, Boston College’s economist Brian Bethune said: “All this.”

As he promised on the campaign court, Trump has increased decades of North -American commercial policy. It has been imposing, sometimes, sometimes suspended, large taxes or rates on a wide range of goals. Currently, a 10% amount has been plastered in products from almost all countries around the world. Has arrived in China, the third largest trade partner in America and the second source of imported goods, with an impressive145% rate.

China has responded with retaliation rates.125% in American products. The prison trade war between the two largest economies in the world has shaken world financial markets and has threatened to bring American trade to China.

Gene Seroka, executive director of the port of Los Angeles, warned last Thursday in two weeks arriving at the port “will fall by 35%, as essentially all China shipments for merchants and important manufacturers have ceased.

After Trump announced expansive rates in early April, China Ocean Container Reserves in the United States fell by 60% and stayed there, Ryan Petersen, founder and CEO of Flexport, a San Francisco company that helps companies to send the load worldwide. With dropped orders, ocean carriers have reduced their capacity by canceling 25% of their navigations, said flexport.

Many companies sought to overcome the clock by providing foreign goods before Trump’s rates came into force. In fact, this is a great reason that the economic growth of the first quarter is expected to be so low: an increase in imports increased the commercial deficit, which weighs growth.

In the distribution of goods ahead of the trade war, many companies “will be positioned to overcome this storm for a while,” said Judah Levine, research director of the Freightos World Freight Platform. “But at a time, inventories will be reduced.”

In the coming weeks, Levine said: “You could start to see scarcity … It is likely that it is concentrated in categories where the United States depends very much on Chinese manufacturing and there are not many alternatives and, of course, fast alternatives.

Jay Foreman, Chief Executive Officer of Toymaker Basic Fun, said he paused Tonka’s trucks, care bears, and other China toys after the Trump Trump Plan was announced in early April. Now, he hopes to spend a few months in the inventory that has been stored.

“Consumers will find basic fun toys in stores for a month or two, but very quickly we will be out of stocks and the stock market will disappear from the shop shelves,” he said.

Kevin Brusky, who owns Ape Games, a small board game publisher in St. Louis, has about 7,000 copies of three different games sitting in a warehouse in China. The $ 25,000 fare bill would erase its benefit from the Games, so it will launch a Kickstarter campaign next week to help cover the cost of duties.

However, his sales representative urges him to import games if possible, because he hopes that the retailers will soon be desperate for the products to be sold. If you care about games, Brusky plans to increase your price from 40 to 45 dollars.

Concerned that the rates promote prices and move customers away, retailers have launched the expansion plans for next year, said Naveen Jaggi, president of the retail counseling services in the Americas for the real estate firm JLL. “What they tell us is:” We want to stop the decision to open stores and commit to leases “because they want to see how the consumer reacts.”

Consumers already seem to leave. The conference council, a business group,reported on Tuesday that the confidence of the North -Americans in the economy fellDuring the fifth consecutive month to the lowest level from the appearance of the Covid-19 pandemic. Almost a third of consumers expect the recruitment to slow down in the coming months, almost coincided with the level reached in April 2009, when the economy was seen in the great recession.

Consumer spending represents about 70% of the United States GDP, so if nervous consumers stop buying, the economic fall could be ugly. Economist Joseph Brusuels de la Consultoria RSM has the probability of a recession for the next 12 months to 55%.

Even Gloomier is Torsten Sip, chief economist Apollo Global Management. It comes 90% of recession to this summer if Trump’s rates remain in place. He said that companies are already planning major interruptions, especially for 145% duties on goods in China.

“You see, in the company’s reactions: Orders have dropped, (expense) plans have dropped, costs are over, paid prices are increased,” he said.

He hopes great loss of trucks and retailers as soon as at the end of May, as the slowdown of goods reaching the North Ports -Americans in China works through the supply chain.

Flexport’s CEO, Petersen, said that the scarce of products is not “a tragedy”.

“It will be much more about the layoffs that follow,” said Petersen. “It is where the actual pain will be felt. The scarce means that companies do not sell things and therefore do not have the benefits they need to pay their employees.”

He said that the bets are so high that the United States and China are waiting for their trade war and lower rates. In fact, Trump and his advisers have sounded more conciliators lately. The Treasury Secretary, Scott BessentThey are not sustainable.

But the abrupt changes in the risk of trade policy increase the uncertainty that has paralyzed companies and consumers worried.

In addition, the economist Cory Stahle of the Contracting Laboratory said, “the conditions can worsen in the coming months if people are starting to behave as if they were in a recession. The softening some of the recent commercial policy changes may alleviate some business concerns, but it may be too late.”

This story originally presented to Fortune.com

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