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U.S.–China Tariffs Drive Supply Chain Disruptions and Heightened Recession Risks

Sharp declines in Chinese imports, retailer warnings, and growing economic uncertainty highlight the fallout from 145% tariffs imposed by the Trump administration.

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Shipping containers pile up at a terminal in Shanghai, China, on April 20, 2025. (Chinatopix)
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Many shippers are pausing, or outright canceling, shipments due to the trade war.

Overview

  • Cargo shipments from China to the U.S. have dropped by as much as 60%, with major retailers like Walmart and Target warning of empty shelves and rising prices if the tariffs persist.
  • U.S. importers are increasingly shifting sourcing to Southeast Asia, with cancellations of Chinese bookings reaching 30% and rising demand from countries like Cambodia, Thailand, and Vietnam.
  • The Federal Reserve’s Beige Book reports flat economic activity but highlights pervasive uncertainty around trade policy and a rush to purchase big-ticket items ahead of price hikes.
  • Economists warn of significant layoffs in logistics, retail, and trucking sectors, with some comparing potential shortages to those seen during the COVID-19 pandemic.
  • Forecasting models estimate a 60% chance of a U.S. recession in 2025, as trade disruptions and consumer behavior shifts raise inflation and dampen economic sentiment.