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Shipping containers are seen ready for transport at the Guangzhou Port in the Nansha district in southern China's Guangdong province, April 17, 2025. (AP Photo/Ng Han Guan, File)2025-04-30T04:01:07Z WASHINGTON (AP) 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 presidents 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 worlds biggest economy could be traced to Trumps 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. Hes been imposing then sometimes suspending big import taxes, or tariffs, on a wide range of targets. Hes currently plastered a 10% levy on products from almost every country in the world. Hes hit China Americas 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 worlds two biggest economies has shaken global financial markets and threatened to bring U.S.-China trade to a standstill. Gene Seroka, executive director of the Port of Los Angeles, warned last Thursday within two weeks arrivals to the port will drop by 35% as essentially all shipments out of China for major retailers and manufacturers has ceased. Seroka added that cargo from Southeast Asia also is much softer than normal with tariffs now in place.After Trump announced expansive tariffs in early April, ocean container bookings from China to the United States dropped 60% -- and stayed there, said Ryan Petersen, founder and CEO of Flexport, a San Francisco company that helps companies ship cargo around the world. With orders down, ocean carriers have reduced their capacity by cancelling 25% of their sailings, Flexport said.Many companies tried to beat the clock by bringing in foreign goods before Trumps tariffs took effect. In fact, that is a big reason that first-quarter economic growth is expected to come in so low: A surge in imports swelled the trade deficit, which weighs on growth.By stockpiling goods ahead of the trade war, many companies will be positioned to ride out this storm for a while, said Judah Levine, research director at the global freight-booking platform Freightos. But at a certain point, inventories will run down. In the next few weeks, Levine said, you could start seeing shortages ... its likely to be concentrated in categories where the U.S. is heavily dependent on Chinese manufacturing and there arent a lot of alternatives and certainly quick alternatives. Among them: furniture, baby products and plastic goods, including toys.Jay Foreman, CEO of toymaker Basic Fun, said he paused shipments of Tonka trucks, Care Bears and other toys from China after Trumps tariff plan was announced in early April. Now, hes hoping to get by for a few months on inventory hes stockpiled.Consumers will find Basic Fun toys in stores for a month or two but very quickly we will be out of stock and stock product will disappear from store shelves, he said. Kevin Brusky, who owns APE Games, a small tabletop game publisher in St. Louis, has about 7,000 copies of three different games sitting in a warehouse in China. The tariff bill of about $25,000 would wipe out his profit on the games, so he is launching a Kickstarter campaign next week to help defray the cost of the duties. Still, his sales representative is urging him to import the games if possible, because he expects that retailers will soon be desperate for products to sell. If he does import the games, Brusky is considering raising its price from $40 to at least $45. Worried that tariffs will push up prices and drive away customer, retailers have put expansion plans on hold for next year, said Naveen Jaggi, president of retail advisory services in the Americas for real-estate firm JLL. What they are telling us is: We want to slow down the decision to open up stores and commit to leases because they want to watch how the consumer reacts. Consumers already seem to be freaking out. The Conference Board, a business group, reported Tuesday that Americans confidence in the economy fell for the fifth straight month to the lowest level since the onset of the COVID-19 pandemic. Nearly one-third of consumers expect hiring to slow in the coming months, nearly matching the level reached in April 2009, when the economy was mired in the Great Recession.Consumer spending accounts for about 70% of U.S. GDP so if nervous consumers stop shopping, the economic fallout could get ugly. Economist Joseph Brusuelas of the consultancy RSM pegs the probability of a recession within the next 12 months at 55%.Even gloomier is Torsten Slok, chief economist at Apollo Global Management. He sees a 90% chance of a recession by this summer if Trumps tariffs remain in place. Businesses are already planning on significant disruptions, particularly from the 145% duties on goods from China, he said.You see that in company reactions: Orders are down, (spending) plans are down, costs are up, prices paid are up, he said.He expects large layoffs by trucking firms and retailers as soon as late May, as the slowdown in goods coming into U.S. ports from China works its way through the supply chain.Flexport CEO Petersen said shortages of products are not a tragedy. Its going to be much more about the layoffs that follow, Petersen said. Thats where the real pain is going to be felt. Shortages mean companies arent selling stuff and therefore dont have the profits that they need to pay their workers.He said the stakes are so high that he expects the U.S. and China to deescalate their trade war and bring down the tariffs. In fact, Trump and his advisers have sounded more conciliatory lately. Treasury Secretary Scott Bessent, for example, said that the triple-digit tariffs the U.S. and China have slapped on each other are not sustainable.But more abrupt shifts in trade policy risk increasing the uncertainty that has paralyzed businesses and worried consumers.Moreover, said economist Cory Stahle of the Indeed Hiring Lab, conditions may worsen in the coming months if people start behaving like they are in a recession. Softening some of the recent trade policy changes may ease some business concerns, but it may already be too late.___DInnocenzio reported from New York ANNE DINNOCENZIO DInnocenzio writes about retail, trends, the consumer economy and hourly workers for The Associated Press. twitter mailto CHRISTOPHER RUGABER Rugaber has covered the Federal Reserve and the U.S. economy for the AP for 16 years. He is a two-time finalist for the Gerald Loeb award for business reporting. twitter mailto
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