Trade War Has Paralyzed Supply Chains Between World’s Two Largest Economies

President Donald Trump has stated his intention to eventually lower the massive trade tariffs on Chinese goods, though he emphasized this won’t happen in the immediate future. This statement comes at a time when business activity between the US and China has virtually stopped due to previously imposed tariffs: 145% duties on Chinese imports by the US and retaliatory 125% tariffs on American goods by China. The situation has already led to serious disruptions in global supply chains and may cause price increases on a wide range of consumer goods in the United States.

Trump Hints at Possibility of Compromise

During an interview on NBC’s Meet the Press with Kristen Welker, which aired on Sunday, President Trump spoke about the prospects of easing trade policy toward China.

“At some point I’m going to lower them, because otherwise you’re never going to be able to do business with them, and they’re very anxious to do business,” Trump said.

This is the first signal of a possible softening in the Trump administration’s position since the introduction of new tariffs on April 2, 2025. Initially, the tariffs were 34% on Chinese goods, but the White House later sharply increased this figure to 145%, which prompted an immediate response from Beijing.

In his interview, Trump pointed to economic weakness within China as evidence of the effectiveness of his pressure strategy. He noted that Chinese factory activity had fallen to its strongest decline since 2023, and the official purchasing managers’ index showed that new export orders had reached their lowest level since December 2022.

“We’re seeing signs that the Chinese side is ready for dialogue, and that’s a good sign,” comments Sarah Chen, an international trade analyst from the Institute of Global Economics. “However, Trump’s statement about lowering tariffs ‘at some point’ is rather vague and may mean that the administration is still expecting significant concessions from China.”

Trade Collapse: Retailers and Manufacturers in Limbo

The introduction of high tariffs led to an almost immediate halt in trade flows between the world’s two largest economies. American retailers immediately suspended orders, and many Chinese factories froze production operations due to the resulting uncertainty.

According to Cameron Johnson, senior partner at Tidalwave Solutions in Shanghai, some factories have begun to resume activities, but only because of concerns about missing the important sales season.

“If you don’t start production in the next couple of weeks, you start missing Black Friday and Christmas,” Johnson warned, adding that “both sides are trying to be flexible to a certain degree.” He also noted an important point: restarting supply chains after a complete shutdown is much more difficult than maintaining their operation.

Maritime transport statistics clearly demonstrate the scale of the problem. According to data from Morgan Stanley, which tracks shipping traffic, the number of container ships heading from China to the US has sharply decreased in recent weeks. Between April 14 and May 5, the number of canceled cargo flights increased 14-fold compared to the period from March 10 to April 7, indicating a sharp slowdown in trade activity.

“We’re seeing an unprecedented level of uncertainty in supply chains,” says Alexei Voronov, head of logistics at international consulting company GLS. “Companies are forced to urgently review their procurement strategies and seek alternative supply sources, which is itself a complex and costly process.”

China Considering Negotiations Amid Economic Difficulties

The situation in China looks no less tense. Official economic indicators point to serious problems caused by the trade war. According to the purchasing managers’ index, new export orders fell to their lowest level since December 2022, and the rate of decline was the fastest since April of the same year, when Shanghai was under lockdown due to COVID-19.

Under these conditions, Beijing is beginning to show signs of readiness for compromise. On Friday, China’s Ministry of Commerce made an important statement, saying it is “currently evaluating” the option of trade negotiations with the US. This is the first instance since the introduction of new tariffs that China has officially admitted the possibility of negotiations.

Trump noted that China had recently made several “positive” statements but emphasized that any deal between the two sides must be “fair.”

“The Chinese economy is facing serious domestic problems, including a real estate market crisis and slowing consumer demand,” explains Michael Kornev, an expert on Asian markets. “A prolonged trade war with the US only exacerbates these problems, so it’s important for Beijing to find a compromise, but to do so while saving face.”

Implications for Consumers and the Global Economy

Experts warn that if the trade war between the US and China drags on, consumers will inevitably feel its consequences in the form of price increases on a wide range of goods—from electronics and clothing to toys and production equipment.

According to preliminary estimates by analysts at the Federal Reserve Bank of New York, the continuation of the trade war in its current format could lead to an increase in US consumer prices by 3-5% over the next 6-12 months.

“Many American companies tried to outsmart the tariffs by stockpiling in late last year when they expected Trump to return to power and raise trade duties,” the article notes. This move temporarily increased Chinese exports: shipments from China to the US in March grew by 9.1% compared to the same month last year. However, these stocks are gradually being depleted, and without resumption of supplies, retailers may face product shortages ahead of the holiday season.

“Trump’s statement about possibly lowering tariffs in the future could be a first step toward de-escalation, but specific timelines and conditions remain unclear,” concludes Elena Sokolova, an economist and international trade specialist. “In the short term, companies and consumers will have to adapt to the new realities of high tariffs and disrupted supply chains.”

As both countries prepare for possible negotiations, global markets are closely monitoring the situation, recognizing that the outcome of this trade confrontation will have a significant impact on the world economy as a whole.