Jamie Spencer
The economic consequences of tariffs imposed by the Trump administration are expected to become apparent to everyday Americans soon, with a potential recession on the horizon for this summer, according to Apollo Global Management.
Timeline for Tariff Impact
Torsten Slok, Chief Economist at Apollo, laid out a timeline for clients that outlines the likely effects of tariffs on the U.S. economy. Based on the time required for goods to be transported from China, U.S. consumers could start noticing trade-related shortages in their local stores as soon as next month.
“The consequence will be empty shelves in U.S. stores in a few weeks and Covid-like shortages for consumers and for firms using Chinese products as intermediate goods,” Slok wrote in a note to clients on Friday.
Tariff to Recession Timeline:
- April 2: Tariffs announced, containership departures from China to U.S. slowing
- Early-to-mid May: Containerships to U.S. ports come to a stop
- Mid-to-late May: Trucking demand comes to a halt, leading to empty shelves and lower sales for companies
- Late May to early June: Layoffs in trucking and retail industries
- Summer 2025: Recession expected
Source: Apollo Global Management
Economic Signs of a Recession
Slok also pointed to several indicators suggesting the U.S. economy may soon enter a recession. New orders for business, earnings outlooks, and capital spending plans have all fallen sharply in recent weeks, signaling that the economy is slowing down. While some tariffs have been paused, the Trump administration has increased duties on Chinese imports, which have now reached a 145% rate. This tariff increase could put further strain on the U.S. economy.
China’s Role in the U.S. Economy
China remains a major player in the U.S. economy. In 2024, the U.S. imported $438.9 billion worth of goods from China, according to the Office of the United States Trade Representative. This made China one of the largest trading partners of the U.S., just behind Mexico and above Canada.
While many analysts on Wall Street are forecasting a recession in 2025, Slok’s predictions are more pessimistic, suggesting that the combination of tariff policies and the resulting economic slowdown could lead to a sharp contraction in the U.S. economy.
Potential for “Pull-forward” of Orders
There is some evidence that the U.S. might experience a “pull-forward” in orders due to preemptive purchases made before the tariffs were officially announced. This could help to keep goods on store shelves for longer than expected.
“Don’t expect empty shelves yet — stock is still up year-to-date, and demand is slowing,” said Aneesha Sherman, a Bernstein analyst, in a note to clients on Monday.
Key Takeaways
- The U.S. economy could face significant disruptions due to the tariff policies under the Trump administration.
- Trade-related shortages are expected to start affecting U.S. consumers in the near future.
- Higher tariffs on Chinese goods are likely to worsen economic conditions, contributing to a potential recession by summer 2025.
- The economic impact could lead to empty store shelves, layoffs in various industries, and a slowdown in consumer spending.
- However, there is some uncertainty about whether the pull-forward of orders will delay or mitigate some of the immediate effects.
