Former Trump Advisor Warns: Tariff Impact on US Consumers to Hit by Late May

US consumers are bracing for significant price increases in stores due to newly imposed tariffs on Chinese imports, according to Gary Cohn, former chief economic advisor to President Donald Trump and current vice chairman at IBM. In a recent CBS interview on "Face the Nation," Cohn forecast that the tariffs' effects will start rippling through the US economy by late May. Cohn explained that the supply chain from China to the US typically takes about eight weeks, starting from the production of goods in China, their shipment across the Pacific, and their distribution to US stores. Since the tariffs went into effect on April 2, the full impact will likely be felt by consumers in the last couple of weeks of May. This timing aligns with what logistics experts and shipping industry insiders have been predicting, who warn of major disruptions to prices and availability of goods. US shoppers have already begun adjusting their purchasing behavior to mitigate the effects of the tariffs. For instance, there have been near-record highs in automobile sales as consumers try to buy big-ticket items before prices rise. Similarly, sales of washing machines and electronics have surged as people attempt to front-load their purchases. However, this proactive buying may be a short-term solution, as softer economic indicators like consumer confidence surveys are beginning to show signs of weakening. Major consumer brands, including Chipotle, PepsiCo, and LVMH, have issued warnings about potential slowing sales in the second quarter. The tariffs are expected to hit small businesses particularly hard, with toy retailers facing a 145% tariff on holiday-season orders. Some retailers are scaling back orders, while others are at risk of closing due to the financial strain. Logistics experts have also highlighted the broader risks associated with these tariffs. They predict that unchecked supply chain stress could lead to higher domestic unemployment, global market instability, and rising geopolitical tensions. The collapse in maritime container bookings between China and the US, down by 64%, further underscores the severity of the situation. Cohn emphasized that tariffs are "highly regressive," meaning they disproportionately affect lower-income Americans who spend a larger portion of their earnings on basic goods. While President Trump has proposed potential tax cuts for households earning under $200,000 to offset the higher costs, Cohn expressed skepticism about the feasibility of implementing such measures in time. He noted that it would be "very fast" for any meaningful tax relief to take effect by the end of May. The economic uncertainty is compounded by the lack of active trade negotiations between the US and China. With no immediate resolution in sight, Cohn warned that the economic turbulence linked to the tariffs is only just beginning. The tariffs' impact is expected to extend beyond consumer prices, potentially affecting job markets, business operations, and overall economic stability. Industry insiders agree with Cohn’s assessment, highlighting the potential for widespread economic repercussions if the tariffs continue without a negotiated settlement. According to a recent report, the shipping and logistics sectors are already experiencing significant strain, which could lead to further complications in the distribution and availability of goods. IBM, where Cohn now serves as vice chairman, is a multinational technology and consulting firm known for its innovation and leadership in various industries. Cohn's warning carries weight due to his deep experience in economic policy and corporate strategy. The company itself has a vested interest in stable international trade relations, as it operates globally and depends on a smooth supply chain for its products and services. In summary, the tariffs on Chinese imports are set to begin affecting US consumers by late May, with significant implications for small businesses, employment, and economic stability. Industry experts and former policymakers like Gary Cohn are cautioning that the economic landscape may become increasingly turbulent unless there is a swift resolution to the trade dispute.