Apollo warns of looming recession due to trade shortages

In the United States, significant economic changes are anticipated due to the tariffs imposed by the Trump administration. According to a presentation by Torsten Slok, chief economist at Apollo Global Management, the repercussions of these tariffs are expected to start affecting consumers as early as May 2025. The slowing of containership departures from China has been noted as the initial phase in a timeline that predicts a cascading effect on supply chains and retail availability. With goods transportation timing from China factored into the scenario, consumers will encounter trade-related shortages at local stores, resulting in empty shelves similar to those seen during the COVID-19 pandemic. As the situation progresses, by mid to late May, it's projected that the demand for trucking may come to a sudden halt. This would lead to significant challenges for retail companies that rely on steady supply chains from overseas, resulting in a halt in sales and subsequent layoffs, particularly within the trucking and retail sectors, by the late May to early June timeframe. The forecast outlines a possible recession for the summer of 2025 driven by these compounding issues, exacerbated by increasing tariff rates, which are currently at a staggering 145% on Chinese goods. Further complicating the economic landscape, data shared by Apollo indicates a sharply diminishing outlook for new business orders, capital spending plans, and overall earnings for companies. The Trump administration, while having paused some tariffs, has increased duties, leading to a precarious and unsustainable trade situation as acknowledged by Treasury Secretary Scott Bessent. The implications are dire for the economy, as consumer habits begin to shift in response to diminished availability of goods, which may initiate a broader recessionary phase. While analysts on Wall Street express concern about a possible recession in 2025, opinions differ regarding the immediacy and extremity of the crisis, with some suggesting that previous order pull-forward tactics may mitigate immediate shortages. That said, consumer confidence may begin to decline soon if these shortages indeed occur as projected. Thus, the scenario remains dynamic, and stakeholders at all levels must be aware of upcoming events to adapt accordingly.