By now, anyone with even half an eye on the news has seen headlines about how the economy is suddenly in trouble because of President Donald Trump’s tariffs: Markets are swinging wildly, investors are panic-buying gold, bond yields are surging, and the dollar is falling. It’s not great. But as you glance up from your phone and look around, maybe nothing feels all that different? You may still have a job. There’s still plenty of produce at the grocery store. Your morning coffee and bagel cost the same as they did a month ago. Maybe the media are blowing everything out of proportion? While I’ll admit we reporters live for a good drama, that’s not exactly what’s going on here. When you think of the trade war, think of a summer storm rolling in. There’s a flash of lightning. One. Two. Three. Four. Then a crash of thunder. Right now, most consumers are in that quiet pause in the middle. The crash is coming. Flashes of light There are effectively two shocks hitting the economy right now: Trump’s tariffs on foreign goods and the paralysis caused by Trump’s messaging about those tariffs. The latter is proving the most broadly disruptive so far, as we saw in the Fed’s Beige Book report Wednesday. The theme of the latest Fed survey of businesses: Uncertainty. The word was mentioned 81 times, the most ever, and up from 47 in March. But the tariffs themselves, especially the 145% tax on Chinese imports, have had an almost immediate impact, especially on American small businesses. Take Busy Baby, a small business based in Minnesota, which specializes in products that tether baby toys and utensils to keep them off the floor. (Side note: I want one for every distraught parent I’ve seen picking their kid’s pacifier off the NYC sidewalk.) Sales have been booming, my colleague Alicia Wallace reports. The veteran-owned company got its foot in the door at Walmart and Target, and it recently placed its largest-ever order from its manufacturer in China. But as of last week, that $158,000 order, which is already paid for, was sitting in a warehouse 7,500 miles away. If it were to get shipped to the US, Busy Baby would be on the hook for an additional $229,100 to cover the 145% tariff. (The founder, Beth Fynbo Benike, launched a crowdfunding campaign to try to cover the cost.) “I’m at risk of going out of business completely,” she told Alicia. Dilemmas like this are playing out across the United States. Many small business owners — which employ nearly half of the US workforce — told Alicia that US-based manufacturing simply doesn’t exist for a lot of products, and hasn’t for decades. If the tariffs hold, business owners’ options become limited: eat the added costs, try to pass the costs onto customers, or fold. For the rest of us, the pain will come in the form of higher prices and fewer options. After years of waiting for pandemic-era inflation to ease, prices are set to surge again. In the fall, the International Monetary Fund predicted US inflation would clock in at 2% in 2025. Now, under Trump’s tariffs, the group expects inflation to hit 3%. The crash Economic shocks don’t hit everyone equally, or all at once. Right now, the folks closest to the lightning strike are the people running businesses. Like Busy Baby, they’re doing everything they can to keep the lights on. After all, it’s only been three weeks since Trump’s “Liberation Day” tariff speech, and many importers bulked up their inventories in advance to try to get ahead of the tariffs. That front-running is winding down, according to Brendan Duke, senior director for economic policy at the Center for American Progress, who notes that the number of vessels coming into the Port of Los Angeles this week are up 57% from a year ago. Next week, that number is projected to normalize, falling just 8% year-over-year. But the crash is just around the corner. “Two weeks from now we’re in The Bad Place,” he wrote on Bluesky, noting incoming shipments were set to fall 44% from the same week last year. But even the “bad place” scenario won’t affect you overnight, Duke said in an interview Thursday. That’s because it takes three to four weeks for a container ship to go from Asia to southern California, Duke said, and most of the ships arriving at the ports of Los Angeles and Long Beach this week left when US businesses were still in stockpiling mode — before super-size tariffs on China were announced on April 9. It could be several more weeks or months before customers start seeing less variety on store shelves, because retailers will draw from their stockpile before resuming imports. Trump has signaled he might take some of the heat off China, but the White House has said the 10% universal tariffs now in place aren’t up for negotiation. Those tariffs alone are still painful for American businesses and consumers. “It’s still going to increase overall prices by 3%. It’s still going to lead to an economic slowdown,” Duke said. “It’s great that you’re averting the worst scenario, but the baseline scenario is pretty horrible, too.”
Not feeling the trade war pain yet? Get ready
TruthLens AI Suggested Headline:
"Economic Impact of Trump's Tariffs Expected to Intensify Amid Rising Uncertainty"
CNN
8.5
TruthLens AI Summary
The economic landscape in the United States is currently facing significant turbulence due to President Donald Trump's tariffs, which have led to increased market volatility and heightened investor anxiety. While consumers may not yet feel the immediate effects of these tariffs, experts warn that the impact is forthcoming. The tariffs, particularly the steep 145% tax on Chinese imports, have created a dual shock to the economy: the tariffs themselves and the uncertainty they generate among businesses. This uncertainty has been highlighted in the Federal Reserve's Beige Book report, which noted that the term 'uncertainty' was mentioned a record 81 times, indicating that businesses are grappling with the potential consequences of the tariffs. Small businesses, which employ nearly half of the U.S. workforce, are particularly vulnerable. For instance, Busy Baby, a Minnesota-based company that produces baby product accessories, faces a dire situation with a significant order stuck overseas due to the tariffs. The owner, Beth Fynbo Benike, is at risk of losing her business if she cannot cover the additional costs imposed by the tariffs, reflecting a broader trend where many small businesses may be forced to raise prices or shut down altogether.
As the situation develops, consumers can expect to feel the repercussions in the form of rising prices and diminished product availability. The International Monetary Fund has revised its inflation forecasts, now projecting that inflation could rise to 3% due to the tariffs, compared to an earlier estimate of 2% by 2025. While some businesses have stockpiled inventory to mitigate immediate impacts, analysts predict that the effects will become more pronounced in the coming weeks and months as the influx of imports slows down. The number of vessels arriving at key ports is expected to decrease significantly, which will exacerbate shortages and further drive up prices. Even if the administration adjusts tariffs on China, the existing 10% tariffs are still anticipated to contribute to an economic slowdown. Experts suggest that while the worst-case scenario may be averted, the baseline situation remains troubling, indicating that consumers should prepare for higher costs and fewer choices in the marketplace as the economic storm intensifies.
TruthLens AI Analysis
The article examines the current economic situation amid President Trump's tariffs and how consumers are perceiving these changes. It highlights the disconnect between media narratives about economic turmoil and the everyday experiences of individuals who may not yet feel the impacts of the trade war.
Perception vs. Reality
There is a noticeable gap between the dramatic headlines about the economy and the lived reality of many consumers. While markets are volatile, and economic indicators suggest trouble, many people are still going about their daily lives without feeling immediate effects. This could indicate a delay in the consequences of the tariffs or a resilience in the economy that may not be sustainable.
Economic Uncertainty
The article emphasizes that uncertainty is a significant theme affecting businesses, as highlighted by the Federal Reserve's Beige Book report. The repeated mention of "uncertainty" reflects the apprehension among businesses, which may lead to cautious spending and investment. This sentiment is crucial as it can impact economic growth and consumer confidence in the long term.
Impact on Small Businesses
The specific example of Busy Baby illustrates how tariffs are beginning to affect small businesses. Although some may still be thriving, the looming threat of increased costs due to tariffs could disrupt their operations. This highlights the broader implications of trade policies on small enterprises, which often have less flexibility to absorb increased costs compared to larger corporations.
Media Influence and Manipulation
The article raises questions about media narratives and their potential to create panic. It suggests that while the situation is serious, media exaggeration may lead to a skewed perception of reality. This could serve to amplify fears or create a sense of urgency that may not accurately reflect the immediate economic situation.
Potential Consequences
Looking ahead, the article suggests that the economic repercussions of the trade war may yet unfold, affecting jobs, prices, and overall economic stability. The potential for increased prices on consumer goods and the impact on small businesses could lead to broader economic challenges.
Target Audience
This news piece appears to cater to a general audience that is concerned about economic stability, particularly those who may be feeling the effects of recent policies. It may resonate more with small business owners and consumers who are conscious of their spending and economic conditions.
Market Impact
The article could influence market sentiment, particularly among investors monitoring sectors that may be affected by tariffs. Stocks related to consumer goods, importers, and small businesses may see fluctuations based on perceptions of how tariffs will impact their operations and profitability.
Global Power Dynamics
In the context of global economics, the article touches on the implications of the trade war for international relations and economic power balances. As trade policies shift, they could reshape alliances and economic dependencies, impacting the broader geopolitical landscape.
Use of AI in Reporting
There is no direct indication that AI was used in writing this article, but the structured presentation of information and data could suggest data-driven approaches. If AI were involved, it might have helped in analyzing trends or summarizing reports but the human touch in narrative and context is evident.
The overall credibility of the article seems strong, as it presents a balanced view of the current economic climate while acknowledging differing perceptions. However, the emphasis on uncertainty and the potential for future economic challenges could be seen as a cautionary tale rather than an alarmist perspective. The article effectively bridges the gap between media narratives and consumer realities, offering a nuanced view of the ongoing trade war.