The U.S. Economy Girds for a Shock in the Trade War

Shipping slows down — specter of empty shelves and a recession as the tariffs land

Author

Matt Davis
May 04, 2025

Morning. Next week is when we’re all going to be f___ed over by the trade war, apparently, as if stock market plunges and anxiety weren’t good news enough already.

Here’s the quick version of the story in the New York Times, on Twitter yesterday morning (with apol’s for the big swear coming up):

And evidently somebody smart at the Times saw that, then they dispatched reporter Ana Swanson to report on it:

The lead:

The number of massive container ships carrying metal boxes of toys, furniture and other products departing China for the United States plummeted by about a third in April.

It’s a story that’s both simple and complex at the same time. The simplicity is beautiful: It takes a long time for ships to get to the U.S. from China. But when you cancel a third of the orders a month ago, it takes about a month for all the results to kick in. And that’s what’s happening. It takes the Times two long paragraphs to say it only slightly more effectively but here you are:

The reason consumers haven’t felt many of the effects yet is because it takes 20 to 40 days for a container ship to travel across the Pacific Ocean. It then takes another one to 10 days for Chinese goods to make their way by train or truck to various cities around the country, economists at Apollo Global Management wrote in a recent report. That means that the higher tariffs on China that went into effect at the beginning of April are just starting to result in a drop in the number of ships arriving at American ports, a trend that should intensify.

By late May or early June, consumers could start to see some empty shelves, and layoffs could occur for retailers and logistics industries. The major effects on the U.S. economy of shutting down trade with China will start to become apparent in the summer of 2025, when the United States might slip into a recession, said Torsten Slok, an economist at Apollo.

A recession, eh? That’s right!


“U.S. consumers will within a few weeks see empty shelves in clothing stores, toy stores, hardware stores and retail drugstores, and higher prices of the goods that still are on the shelves,” he said.

Call me terrible if you will, but I almost can’t wait for the bread line images, just because of the damage it will deservedly do to Donald Trump’s reputation. Donald “I broke American retail” Trump. The Trump Slump. And so on. He’s such a chaos monkey.

My favorite bread line image — and there are hundreds on the Internet, amazingly, including a few curated by a U.S. tech startup called QMinder, whose product is designed to help retailers manage queues — is when they opened a McDonald’s in Moscow in 1990:

Call it a line. Call it a queue. Call it an image of a country in dysfunctional torpor. But it could well be coming to an American retailer near you, soon!

McDonald’s left Russia 32 years later — here’s a fascinating press release from McDonald’s announcing the move — over the War in Ukraine which as we all know, should have been over 24 hours into Trump’s second term.

One thing that does occur to me however is we might not see as many bread lines as we should because everyone shops on Amazon these days and so instead, we’ll see fewer Amazon deliveries, but that’s a lot harder to picture. Perhaps Jeff Bezos will dispatch his Washington Post reporters to cover the news? 😇 

If only the New York Times could get a good quote to illustrate what this means. Wait. Well done, Ana. This is [chef’s kiss] great reporting:

Molson Hart, the chief executive of Viahart, a toy company, wrote on X: “It’s almost like we’re speeding towards a brick wall but the driver of the car doesn’t see it yet. By the time he does, it’ll be too late to hit the brakes.”

That’s how you do this journalism thing! And well done, Molson “I have a good name” Hart, for giving such great quote.

Here’s what the shift means for my family. I know you were asking yourself that. So.

My father in law bought us some dinner plates on Temu for Christmas after he visited in the fall and rightly observed that our stock of East Fork (they’re too heavy, and they lean into their social justice credentials but ultimately the stuff is just, I dunno…it’s too clunky for me although my wife loves it because she never saw a bowl she didn’t want to eat out of…meanwhile plates bring out a Millenial horror in her…) bowls and plates was dwindling. Both my wife and I have a tendency to throw them on the floor like it’s a Greek Wedding, or at least you’d think so, judging by how few we had left last October.

Big Mike, who likes Temu, got us a set of dinner plates, bowls, and some serving dishes delivered from the Far East (I love to call China the “Far East,” with apologies to Edward Saïd and all who sail in him) and — as long as you like the quite full-on psychedelic-style pattern on these plates — problem solved! Big Mike didn’t tell me what they cost but I can imagine it was slightly more affordable than the tasteful and refined Thomas Rosenthal 1980s West German Flammfest pottery I’ve been slowly collecting for years.

Still, I did manage to break a Temu bowl last week. And I imagine there’ll be more room for more Thomas pottery by next spring, regardless. Also: A family’s gotta eat! So don’t take this as my ingratitude for Big Mike’s contribution to our household. That would be a mistake. Still it seems that Big Mike won’t be able to order our family any more psychedelic plates on Temu for the time being and for that I am just furious with Donald Trump.

God.

The decline in Chinese imports will be amplified on Friday, when the United States eliminates so-called de minimis treatment for Chinese goods. The rule has allowed products up to $800 to avoid tariffs as long as they are shipped directly to consumers. It has boosted the business model of companies like Temu and Shein, and it has resulted in a surge of individually addressed packages to the United States, many of which are shipped by air.

Don’t be minimizing the importance of my de minimis. Getting rid of it has led to higher prices for U.S. consumers. Airlines and shippers, who have steady business delivering small-dollar goods, are all going to get…well, they’re going to get f___ed. I realize that’s a lot of f-words today but the guy from the Port of Los Angeles rather set us all off.

Speaking of which, he told the Times that imports had spiked over recent weeks as everyone tried to get ahead of the tariffs. Now with a deal still not coming through with China, those import numbers are tailing off and the rot is ready to set in.

Trump officials have admitted that there could be some disruptions for consumers. The president seemed to acknowledge on Wednesday that his trade changes could lead to fewer goods and higher prices.

“You know, somebody said, ‘Oh, the shelves are going to be open,’” Mr. Trump said from the White House. “Well, maybe the children will have two dolls instead of 30 dolls, you know? And maybe the two dolls will cost a couple of bucks more than they would normally.”

Kids don’t play with dolls these days, Donald. They watch iPads. You moron.

Still, Treasury Secretary Scott Bessent said at a Tuesday briefing that retailers have managed their inventory around the tariffs and that shocks will be “minimal.” So, which is it? Apocalypse Soon or Apocalypse Not?

Well, there’s no clarity. That’s the fault of the Trump administration and without clarity, you snarl up trade.

With so much unclear about where global trade is headed, companies are freezing their plans for expansion and halting new orders.

Ryan Petersen, the chief executive of Flexport, a supply chain company, had this to say: “You’ll see high prices, you’ll see delays. The longer you wait to make changes, the more severe the shock will be.”

So apart from the fact that my father-in-law will think twice before ordering us any more dinnerware, and apart from the fact that Donald Trump is going to look utterly terrible over this, there is also the added uncertainty of just how bad everything is going to get. And that really should be worrying people.

Markets, I think, all anticipate a trade deal with China sooner or later, and so do I. But with this administration nobody really knows, do they? And that’s what’s so unnerving. That’s what’s so exhausting. And it’s why nobody really likes to read the newspaper.

Thanks for letting me do it so that you don’t have to.

Say, is there a story that might cheer me up a bit?

Oh, sure. Read the review of restauranteur Keith McNally’s new book, I Regret Almost Everything, which opens with a quote from George Orwell; “Autobiography is only to be trusted when it reveals something disgraceful.”

McNally had a “sexual relationship” with Alan Bennett that only sounds extraordinarily exploitative on Bennett’s part (hence the “regret”?). But times were different back then, and McNally has parlayed his understanding of the importance of evoking an atmosphere, not to mention flair for the dramatic when it comes to dealing with celebrities, into a very successful set of restaurants across Manhattan. We go for breakfast regularly at Morandi down the street. It feels like somewhere in Europe even though it’s actually in the ground floor of a 1970s tower block and they’ve eggwashed all the air conditioners. The food is fine. It’s nothing to do with the food. I like his non-nonsense approach. I’m sorry he had a stroke, too. That sounds horrible.

The Brash, Working-Class Londoner Who Redefined New York’s Restaurants

Matt Davis lives in Manhattan with his wife and kid.

Standard disclaimer: I read the top story in the New York Times every morning so that you don’t have to. If you were forwarded this, you can subscribe here. I’m also doing a five-minute video version of this, each weekday morning at around 9 a.m. (depending on how long it takes me to read the newspaper). If you’d like to follow me on LinkedIn (you can always watch the recording later). If you subscribe to my Youtube channel it’ll also send you a notification when I’m “going live.”