The Trump Economic Shock Is Right Around the Corner

By Jacob Weindling  |  April 18, 2025 | 2:28pm
Photo by The White House
Economy Trade War
The Trump Economic Shock Is Right Around the Corner

Imagine I set up shop in your town selling something that you really wanted, and I told you that for 90 days, if you buy it, I’m going to shoot you in the leg as you walk out—but after 90 days, I may not shoot you in the leg and you can possibly buy it bullet-free then. Are you going to buy my product in the next 90 days?

Welcome to what’s just around the corner thanks entirely to Trump’s tariff announcement. The reason why everyone is so worried about the recent catastrophic consumer confidence numbers is because they can be a recessionary self-fulfilling prophecy. As the saying goes, we live in a society, and if we are all incentivized to pull back our spending and we all think that is the best thing to do, whether it actually is the best thing to do is secondary to the impact that pulling back our spending has, which is a common way that recessions happen. There are less dollars chasing less goods right now, and there will be as long as Trump promises that a future tariff rate may be lower than today’s astronomical ones. This isn’t even economics 101, it’s simple logic you could teach a toddler about the difference between big and small numbers and how linear time works, and yet, Trump doesn’t get it.

He may be forced to soon though, because we are starting to get a glimpse of what trade looks like under these tariffs exceeding the scale of the infamous Smoot-Hawley tariffs in the 1930s, and it’s exactly what everyone with a cursory understanding of economics expected.

The freight guys have really started freaking out over the past 48-72 hours:

Transpacific trade is already seizing up because of the tariffs.

Three weeks ago, about 60,000 TEU (a measure of container volume) were scheduled to be “blanked” from April 16-May 10 (cancelled voyages/stops at a port). Now the figure is *367,800*

www.sea-intelligence.com/press-room/3…

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— Mike Bird (@birdyword.bsky.social) April 17, 2025 at 8:13 PM

This, more than anything, is proof of the hopeful theory that this authoritarian takeover by Trump is more of them throwing shit at the wall and seeing what sticks than any kind of coherent plan. Their own words shocked the economy–past-tense–we have the shipping orders, or lack thereof, to prove it. The question now is how bad is it? This is not about historic tariff rates cutting into profit margins unless they are passed down to the consumer, not yet. This impending disaster around shipping orders is about business and consumer confidence, as one freight expert told CNBC that “we won’t go to zero containers, but we will see a decrease in containers and as a result, in the future we will see a massive raft of blank sailings announced.”

Trump. Is. Cratering. The. Economy. This is not some abstract future notion. What was expected to happen is happening right now and has already happened. The bond market has been bracing for it since September, high level traders were making a stagflationary trade last year after the debate and now impending shipping data after Trump’s liberation day is proving that people are doing exactly what you would expect them to do given Trump’s own words and wishes.

We are not even on to the inflationary part of this trade war associated with the tariffs increasing costs yet. This is deflation, and it’s part of why the market took last month’s best in five years inflation reading as a negative. People are very clearly pulling back their spending because Trump is telling everyone he plans to make every part of their lives more expensive until an undetermined future date. When people pull back their spending and GDP declines for two quarters in a row, that is as classic of a definition of a recession as it gets, and it also more and more seems like the baseline scenario given where Trump wants to take the economy.

 
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