Make America Poor Again: The Real Cost of Tariff Madness

The global economy stands on shaky ground as the Trump administration's aggressive tariff policies send shockwaves through international supply chains. Behind closed doors at the White House this week, retail giants Walmart, Target, and Home Depot delivered a stark warning: continue with these excessive tariffs, and American supermarket shelves will be empty by autumn. Small and medium-sized businesses are already abandoning imported goods at US ports, unable to afford tariffs that would bankrupt their operations.

The real-world consequences are mounting rapidly. The International Monetary Fund has downgraded global growth forecasts, with the US economy expected to grow just 1.8% this year. Companies are rapidly restructuring their supply chains – Apple announced plans to source US-market iPhones from India instead of China, while Amazon sellers scramble to find suppliers in countries with lower tariff rates. Most tellingly, these businesses aren't looking to American manufacturers, revealing the fundamental flaw in the "Make America Great Again" trade strategy.

Perhaps most concerning is who bears the heaviest burden of these policies. The Institute of Taxation and Economic Policy reports that households earning under $29,000 will see tax increases (because tariffs are taxes) equal to about 6.2% of their income, compared to just 1.7% for the top 1% of earners. As DHL suspends business-to-consumer shipments into the United States due to customs complications and the dollar hits a three-year low, the question becomes unavoidable: are these policies making America poorer rather than greater? Subscribe now to stay ahead of these rapidly evolving supply chain disruptions and understand how they'll affect businesses and consumers worldwide.

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Chapters

• 0:00 Podcast Introduction
• 0:35 Trump's Chaotic White House Decisions
• 2:37 Retailers Warn of Empty Shelves
• 6:02 Global Economic Instability and Uncertainty
• 10:25 Apple Shifting Production to India
• 12:12 Tariffs Hurt Low-Income Americans Most
• 14:49 UK-Europe Trade Relations Reset
• 16:25 UK-US Trade Relationship Statistics
• 18:13 Markets and IMF Economic Forecast

Transcript

Tony Hines: 0:19

Hello Tony Hines here you're listening to the Chain Reaction Podcast All About Supply Chain Advantage, Great episode coming your way in just a few moments so stick around, stay tuned and find out more.. Subscribe and you'll be first to know when new episodes are coming your way. Listen before anyone else does. Stay ahead of the game. After all, that's what we do to get that supply chain advantage.

Tony Hines: 0:35

Well, another difficult week in disruptive supply chains and, of course, all instigated by the Trump administration in the United States, caused chaos around the world and this week, of course, even more chaotic inside the White House, as Trump, on the one hand, says he's about to fire Jerome Powell, his Fed Reserve top man, and then, in the next breath, he says no, he's not going to be firing him, but he'd like him to make some adjustments. Well, is this political interference in an independent body? Could be. Does that help the tariff situation? No, because it's bad. Prices up costs, up business, down asset values, down markets, punishing the companies. And they'll punish Trump too. Bond prices will go up unless he backtracks. Will he backtrack? Well, who knows? Should he backtrack? Well, yes, of course he should. Boeing planes turned away from China. China put in restrictions on those rare earth metals needed for all the industry in the United States reliant on new energy. Electronic vehicles that will impact the automobile sector. It will impact tech companies. It will impact anything from your iPhone, android phone, laptop, any device you have electronic device that is, even down to your washing machines, washers and everything else that relies on electronics. So it's pure madness to persist with these mega tariffs or should I say mega tariffs, which might be better described as mapper tariffs make America poor again.

Tony Hines: 2:13

In a behind closed door meeting this week with leading retailers in the United States, president Trump and his administration met with major retailers and his administration met with major retailers, and that included Walmart and some of the biggest retailers in the US, who were all warning Trump that unless he backtracks on tariffs, the shelves in the supermarkets in the United States will be empty by the autumn. And everything else in the economic landscape is pointing to that, because, if we look at the container box situation and forward freight prices, they're all down. The demand for containers is down, everything's down, and this week it was announced that some retailers, and particularly small and medium-sized businesses, are leaving stock at the ports. Yep, it's traveled all the way from the Far East to the United States, but it will now be starting to clog up ports in the US because they can't afford the tariffs to bring those goods into the United States. It would bankrupt them. Walmart, target and Home Depot were three of the big retailers in the room at their behind-closed-door meeting this week at the White House, and they've warned that the supermarket shelves will be empty in the autumn if Trump continues with tariffs, and we've heard some rumblings this week that they're going to think about lowering tariffs with China, but they're talking about 60 and 65% from 145%. It's still very high, isn't it?

Tony Hines: 3:52

And the IMF this week have warned the Trump administration that it will mean slower trade growth all over the world in the coming year and it will also mean more debt. So people will be in more debt and they'll be feeling bad about the situation because there'll be no growth in the economies all over the world. So where's the economic strategy? Where's the industrial strategy from the United States? Is this what world leadership looks like? Well, I don't think so is the answer.

Tony Hines: 4:22

Rachel Reeves was in the United States this week. She's the Chancellor of the Exchequer in the United Kingdom and she was making bids to come and invest in the UK economy because it has more stability. Well, while the UK economy may have more stability, it's got more debt this week about £15 billion. It's got more debt this week about £15 billion, and it does exist in a world economy which is going to be slower in growth, which will impact the UK as well as everywhere else, and interconnections are important, while Trump, of course, is messing around with tariffs and interfering in all kinds of areas that he shouldn't be, like Harvard University, for example, and everywhere else.

Tony Hines: 5:09

Putin is meanwhile still looking in the estate agent's window at a land grab in Ukraine, and he seems to be relishing the Trump administration's benign approach to Russia, while for Ukraine, it's a different story. They're under severe pressure, and is support coming from the United States? Not as much as it could be. Has anyone asked the President how the beach resort's going in Gaza? Don't hear much about that now, do we? Yet another problem that the administration got itself embroiled in, but without any clear solutions, and is a solution likely? Who knows? Is Ukraine likely to be settled in the next 24 days or 24 weeks, never mind 24 hours promised by the President?

Tony Hines: 5:58

Well, what does all this look like for business? Well, for business, it's all bad news. It's costs up, it's orders down, it's delays, it's disruption, it's supply chain problems, and Trump's mad idea to get everything back and produced inside America is just not going to happen Because they don't have the capacity, they don't have the facilities, they don't have the raw materials, they don't have the factories. In fact, they don't have what's being promised in place. But he's got some plans, hasn't he? Take over Greenland, take over Canada, exploit the rest of the world, charge big tariffs, make everybody pay for the investment. Does it sound good? No, does it sound stupid? Yeah. Meanwhile, what about consumers in the United States? Well, they face higher prices, they face empty shelves, which the retailers have already said. They face a reality of perhaps even losing their jobs as businesses close, as industry suffers, as recession bites. Will there be a recession? Well, it could be avoided if he took action quickly, but otherwise it looks very likely there will be a recession, and that could come with the empty shells after the autumn.

Tony Hines: 7:12

Uncertainty brings high risk. It's likely all these actions being taken and tariffs are going to increase Inflation. Not much doubt about that, and some categories are going to suffer more than others. Some industries will suffer more than others. The big industries that the Trump administration want to protect, like automobiles, unlikely to happen. Why? Well, fairly obvious you can't get the materials into the United States without paying all those tariffs. What will the car makers do? Well, I'd move out. Problem is, if you move out, can you sell to the United States market? No. But if you stay put, can you sell to the United States market? Well, no, because you won't have the cars to sell. You won't have the materials, and the cars that do sell will cost an absolute fortune as a result of all the increased cost. So does that sound a good economic policy? Well, it doesn't, does it? Not a policy at all. It sounds more like the road to perdition, and the problem is many will be dragged into this. It's like a vortex. We'll all be inside Trump's tariff problem.

Tony Hines: 8:19

In a Reuters Ipsos poll this week, only 37% of Americans now believe that Donald Trump is handling the economy well. Here's what Americans said they were most concerned about 87% said inflation 86%. Cost of living, growing US debt 79%. Social security 77%. Crime 76%. Recession 76%. The stock market 67%. And unauthorized immigration 65%. On international trade, only 36% approve of the President's actions in that area. I'm surprised that's so high actually 36%. 60 million iPhones are sold in the United States every year and about 80% of those are currently made in China, but this week Apple said it's looking to buy all the iPhones sold in America from India and move production out of China. This is because of tariffs, of course, laid on by Trump. India currently has tariffs of 26% and China, of course, is astronomical, much higher 145%. So is that affecting this decision or is this a longer-term decision? Estimates say that it costs 5-8% more to manufacture in India than in China.

Tony Hines: 9:45

Well, you might be wondering if Trump tariffs are having an impact on sellers at the moment in the United States, and the answer is yes, they are. Hundreds of top-selling items are going up in price on Amazon Somewhere. About 25% of the price increases in recent weeks have come from sellers based in China, and many US-based sellers are searching around the globe for new suppliers in countries like Vietnam, mexico and India, where tariffs are lower than in China. So people are switching. But note they're not going to the United States to make America great again because goods in the United States are too expensive. The only thing that the tariffs have done is make goods from China very expensive. Amazon's stock price has fallen about 15% this year. That's mainly because of the tariffs, which are impacting sales on the e-commerce site.

Tony Hines: 10:46

The Institute of Taxation and Economic Policy in the United States have reported that tariffs will hurt lower income households more than any other category. Well, that's no surprise, is it? Because if you're on a lower income and the prices are going sky high, obviously it's taken away any flexibility you might have had. In 2026, taxes on the poorest 20% of households would rise about four times more than those in the top 1%. If the current tariff policies stay in place, those that have incomes of less than $29,000 will have a tax increase equal to about 6.2% of income. According to their analysis, the top 1% with income more than $915,000, would see a tax rise of about 1.7%. So that's a big difference, isn't it? And if you think about all the nonsense spouted about tariffs and how it's going to make America great again, remember this tariffs are just taxes, and they're taxes on people in the United States as well as placed on those countries around the globe, because, effectively, by putting a tariff on a country you import goods from means the prices are higher when they arrive on your shore and that means businesses pay more for the goods. And if businesses pay more for the goods, consumers do too. I'm guessing a lot of CFOs in the biggest companies in the United States and elsewhere around the globe are working hard this weekend to revise those forecasts for the year ahead. But how do you plan when there's so much uncertainty about tariffs from this Trump administration in the United States? Well, it's almost impossible, is the answer, and unless you've got some stability in the markets and stability in the planning timeline, then it's like putting your finger up and waiting to see which way the wind blows.

Tony Hines: 12:51

The British government this week seems intent on rebuilding bridges with Europe over trade, and that's a sensible move. It's about time that the United Kingdom decided that its biggest trading partner is the one to do the deal with, and not necessarily the United States. Trade deals with the United States are important. Trade deals with other countries are important, but you have to put things in perspective. Europe is closer geographically and most of the trade, imports and exports between Europe and the United Kingdom are higher than most other places that the United Kingdom trades with. So a reset with the European Union would be an important starting point to get things back on track.

Tony Hines: 13:39

If the instability caused by Russia's invasion of Ukraine and that ongoing war and the interference coming from the United States trying to act in an imperialist manner to settle a war between Ukraine and Russia without Ukraine is very high-handed, but it's typical of the current Trump administration's approach to everything. We know. Best approach hardly ever works in business or anywhere else, and it certainly doesn't work in diplomacy and negotiation. We still have ongoing conflicts between Palestine and Israel in Gaza and the situation there seems to be absolutely desperate. And now we have an outbreak of conflict between Pakistan and India, and those are both nuclear states and that's of great concern. And all these things are impacting trade and global supply chains, and not in a good way.

Tony Hines: 14:42

The US is the UK's third largest import partner, behind Germany and China. Of course, the goods going into the United States now are all subject to tariffs. The Office for National Statistics said 16.2% of all UK exports went to the United States in 2024, and there's particularly strong demand for cars and machinery. But of course, these goods are all now subject to a blanket 10% tariff and in the case of cars, it's 25%. Last year, exports from the UK to the US decreased by 2.3 billion pounds or 3.7% to 59.3 billion. That's compared with 2023. The United States is the UK's largest export partner for cars, with £9 billion worth of trade, and that's about 27.4% of total car exports. Machinery and transport account for £29.1 billion in exports to the US, the biggest trading category. The UK imported £57.1 billion worth of goods from the United States, and that's a 1.2 billion or 2% decrease from 2023.

Tony Hines: 15:59

Given the balanced trade between these two countries, the United States and the United Kingdom, it's hardly justifiable for Trump to be adding tariffs to the UK economy. A barrel of oil this week will cost $66.65, and that's down about $1.06. And a troy ounce of gold this week will cost $3,281, and that's down $13.84 on the week. There's been some small recoveries on stock markets around the globe this week. The Dow is up 2.24, nasdaq up 2.25, standard Poor's 500 up 4.29, and the Nikkei up 2.81, the CAC 40% plus 3.4% and the DAX plus 4.9%. The International Monetary Fund this week has revised its forecasts of global growth downwards, and that's because of the trade wars between China and the United States and the tariffs placed by the Trump administration around the globe. They expect the world economy to expand by 2.8% this year, and that's down from a previous projection of 3.3%. All major economies were downgraded. America's GDP is now forecast to rise just 1.8% this year and output in the Eurozone just 0.8 percent, with germany not growing at all.

Tony Hines: 17:31

The chaos caused by the tariffs is there for everyone to see and of course trump was trying to remove jerome powell, his chief at the federal reserve, the chairman. But of course he made a swift turnaround on that one after the markets signalled that that's not a good move. The dollar's at a three-year low against the basket of currencies and the price of gold went above $3,500 for the first time for an ounce, a troy ounce. It's fallen back a bit by the end of the week because things have quietened down a bit and Mr Trump said he wants to be very nice to China. Well, there's a change. It still has duties of 3,521% on imports of solar panels from Cambodia and lower levies on those from Malaysia, thailand and Vietnam and lower levies on those from Malaysia, thailand and Vietnam.

Tony Hines: 18:35

Dhl this week suspended its business-to-consumer shipments in the United States and this is because of the customs checks on de minimis goods going in to the United States. You'll remember that those de minimis packages were about $800. They could travel freely without any customs checks, but now of course they have to go through customs checks and the administration, the paperwork and all the time. The disruption to the supply chain is just not worth it. Tesla this week reported a drop in its revenue of 9% and a 71% fall in net profit for the first quarter year-on-year sales. Of course, tesla is under severe competition from Chinese cars, particularly BYD.

Tony Hines: 19:19

Well, that's it for this edition of the Chain Reaction Podcast. You've been listening to the Pulse, the heartbeat of business. I hope you've enjoyed today's episode and you've learned something in the process, and I'll be back next week with another episode of the Chain Reaction Podcast. Thanks for listening and don't forget to subscribe. You'll be first to know when new episodes drop. Until then, take care, I'm Tony Hines. I'm signing off. Bye for now. You've been listening to the Chain Reaction Podcast, written, presented and produced by Tony Hines.