Tariff dispute: Will the US celebrate Christmas without gifts?

Telepolis Tariff dispute: Will the US celebrate Christmas without gifts? Bernd Müller • 2 hours • 2 minutes read US tariffs on Chinese goods are disrupting supply chains. Even a relaxation could lead to bottlenecks. Business owners fear empty shelves at Christmas. Since the US increased tariffs on Chinese goods to 145 percent in early April, trade between the world's two largest economies has nearly come to a standstill. According to one estimate, freight deliveries from China have plummeted by as much as 60 percent, reports Bloomberg. For many Americans, this hasn't been noticeable so far – but that could soon change. US President Donald Trump recently indicated that tariff negotiations with China were underway and that he had spoken with Chinese President Xi Jinping. However, Beijing denied that trade talks were taking place. Treasury Secretary Scott Bessent was unable to confirm Trump's statements on Sunday. "I don't know if President Trump has spoken with President Xi," he said on ABC's "This Week," according to Reuters. Companies fear empty shelves at Christmas The clock is ticking for many US companies. They must restock their inventory for the holiday season by mid-May. Giant retail chains like Walmart and Target have already warned Trump that consumers can expect empty shelves and higher prices. "We're paralyzed," Jay Foreman, CEO of Florida-based toy manufacturer Basic Fun, told Bloomberg. His company generates annual sales of around $200 million and sources about 90 percent of its products from China. "It's going to really hurt in a few weeks." Jim Gerson, president of Kansas-based Christmas decoration supplier The Gersons Companies, also urgently needs to get his goods from China, according to the report. "We have to get this done," he says. "And hopefully very soon." After all, the company sources about half of its goods from China. Tariff easing also poses risks But even if hostilities between Washington and Beijing ease, the resumption of trade will bring additional risks. The freight industry has adjusted its capacity to the weaker demand. A surge in orders triggered by the easing of tensions could overwhelm the network and lead to delays and higher costs. "There will be an increase in traffic at ports and thus also in trucks and rail, which will lead to delays and bottlenecks," Lars Jensen of shipping consultancy Vespucci Maritime told Bloomberg. Parallels to the Coronavirus Pandemic For toy entrepreneur Foreman, the past few weeks are reminiscent of the pandemic, but there are important differences. The COVID-19 lockdown was a shock, but supply chains recovered relatively quickly. In the end, several industries even had a record year. The current trade dispute could be "more dangerous because the longer it lasts, the more catastrophic it will be," says Foreman. "The aftermath could be worse. But the resolution could also come much faster." The uncertainties associated with Trump's tariff war are also influencing the forecasts of economic researchers. They now consider a recession in the US almost as likely as it is unlikely. Economists have also revised their inflation forecasts upward, as the looming supply shock could drive up prices—at a time when consumer sentiment is already weak.