U.S. Economist elaborates disheartening forecast for the nation: potential economic ramifications of Trump's tariffs.
Rebellious Rewrite:
Hey there, buckle up! It looks like President Trump's tariffs on goods from China could be causing some serious trouble in paradise. Torsten Slok, the all-knowing chief economist at asset manager Apollo, predicts a potential recession in the US by summer. Yikes!
In Slok's recent note, he outlines how the high tariffs on Chinese goods could lead to a big slowdown in US trade, and that could spell bad news for the logistics and retail industries. Talk about a perfect storm!
Executives in numerous sectors have been voicing their concerns about a potential recession in recent earnings reports. And rightfully so - if things keep going the way they are, it just might happen!
According to Slok, the typical transit time for container ships from China is 20 to 40 days. That means container traffic to US ports could come to a complete halt by mid-May. Talk about a traffic jam!
Next in line would be a decrease in demand for truck transport from mid to late May. By the end of May, the effects of Trump's tariffs could lead to what Slok calls "empty shelves." Companies would react to lower sales with layoffs across the logistics and retail industries.
If the US follows this rough timeline, it could slide into a recession this summer. Slok points to data showing that companies and consumers are already adjusting their behavior negatively in anticipation of the threatened tariffs.
So, what are some of the other big voices in the industry saying? Well, according to Robert Jordan, CEO of Southwest Airlines, this is definitely a recession if you can call it that. Scott Boatwright, CEO of Chipotle, says consumers are cutting back on eating out because they're worried about the economy. And Jamie Caulfield, CFO of PepsiCo, doesn't feel as optimistic as she once did.
Even the futures markets are predicting a triple increase in the probability of a US recession in 2025. Not cool, man, not cool.
Now, let's take a look at what Trump's tariff actions against China look like and their potential consequences:- February 4: 10% tariff imposed on all Chinese imports, greeted with China's countermeasures such as 10-15% duties on US energy products and agricultural machinery.- April 5: 10% universal tariff takes effect under IEEPA authority for all countries, with China still under its prior duties.- April 9: China reacts with a 50% counter-tariff, prompting Trump to elevate US tariffs to a staggering 145% cumulative rate on Chinese goods. Reciprocal tariffs on other nations receive a 90-day delay.
The escalation risks bringing on stagflationary pressure through combined input cost increases (tariffs) and export contraction (retaliation), particularly impacting manufacturing-heavy states. So brace yourself, things could get ugly!
- Torsten Slok, Apollo's chief economist, warned of potential layoffs in the logistics and retail industries due to the tariffs, suggesting that the outlook for business in these sectors might be grim.
- The finance world is also concerned about the impact of the tariffs on the trade outlook, with some forecasting a possible triple increase in the probability of a US recession in 2025.
- The escalation of tariffs between the US and China, including a cumulative rate of 145% on Chinese goods, raises fears of a new round of tariff-induced layoffs and stagflationary pressure on manufacturing-heavy states.
- What remains to be seen is how businesses and consumers will react in the coming months, with some already showing signs of negative adjustment in anticipation of the threatened tariffs.
