Tuesday, March 11, 2025

Supply Lines: Where tariffs hurt most

Lower-income Americans just can't seem to catch a break.First the pandemic wrecked havoc on supply chains and sent inflation into a frenzy t
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Lower-income Americans just can't seem to catch a break.

First the pandemic wrecked havoc on supply chains and sent inflation into a frenzy that has yet to wear off. Then the Federal Reserve jacked up interest rates to try to control price pressures, making it more expensive to take out a loan.

Now President Donald Trump's tariffs — and retaliatory measures from other countries — threaten to push up prices of necessities like groceries and electricity even higher, just as the cost of living shows signs of resurging.

While all Americans will have to contend with higher prices, they hit particularly hard for lower-income consumers, who tend to spend a greater share of their incomes on goods over services. (Click here for the full story.)

Read More: Tariff Worry on Wall Street Pressures Trump to Speed Up Tax Cuts

Americans in the bottom third of the income bracket view their current financial situation as among the worst in 14 years, and the gap between their outlook and that of the top third is near an all-time high, according to the University of Michigan.

Walmart is worried about "stress behaviors" among budget-conscious shoppers, and the retailer has asked some Chinese suppliers, including producers of kitchenware and clothing, to lower their prices by as much as 10%.

Target has warned that a 25% tariff on imported goods from Mexico — some of which have already gone into effect — will result in higher prices.

"Undoubtedly you're going to have a larger impact on the lower-income consumer who's already been struggling with inflation and elevated interest rates to a larger degree," said Seth Basham, an analyst at Wedbush Securities. "This is going to set them back even further."

Related Reading:

Molly Smith in New York

Click here for more of Bloomberg.com's most-read stories about trade, supply chains and shipping.

Charted Territory

Another decoupling | American manufacturers are paying much higher prices for aluminum, steel and copper than rival plants overseas, in a trend that's sapping business confidence and stoking worries about inflation even before tariffs on metals come into effect. US prices for the three key industrial raw materials have been ratcheting higher for weeks, partly driven by manufacturers' efforts to build up stocks before US President Donald Trump imposes tariffs on the metals. In the process, they've decoupled from prices that manufacturers are paying in other major industrial economies including China, Germany and Japan.

Today's Must Reads

  • Talks between the US and China on trade and other issues are stuck at lower levels, with both sides talking past each other and failing to agree on the best way to proceed.
  • Volkswagen's US investments should count for something if Trump decides to impose additional tariffs, the company's finance chief said in an interview you can watch here.
  • A Canadian province that exports electricity to the US raised power prices for three states by 25% on Monday in retaliation for Trump's tariffs.
  • Japan's trade minister failed to win an immediate exemption from Trump's tariff campaign even as he doubled down on the request in his first in-person discussions with US counterparts. Australia is playing down the possibility of an exemption from steel and aluminum tariffs expected to be imposed by the US
  • World No. 3 copper supplier Peru will send a delegation to meet with US officials after the Trump administration announced plans to introduce copper tariffs that threaten to disrupt metal trade flows.
  • A cargo ship crashed into an oil tanker off the UK's east coast, causing fires, a jet-fuel spill, and leaving one person missing in one of the most significant maritime disasters near the country in many years. 

On the Bloomberg Terminal

  • A proposed 25% tariff on US imports of copper is rocking global markets, causing a massive price dislocation between New York and other commodity exchanges.
  • Better pricing at FedEx's Express unit appears to be enough to offset tepid demand for now, but expectations may need to be lower given the downside risks to volume beyond the quarter, according to Bloomberg Intelligence.
  • Run SPLC after an equity ticker on Bloomberg to show critical data about a company's suppliers, customers and peers.
  • Use the AHOY function to track global commodities trade flows.
  • See DSET CHOKE for a dataset to monitor shipping chokepoints. 
  • For freight dashboards, see BI RAIL, BI TRCK and BI SHIP and BI 3PLS
  • Click HERE for automated stories about supply chains.
  • On the Bloomberg Terminal, type NH FWV for FreightWaves content.
  • See BNEF for BloombergNEF's analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.

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