It’ll be a response to all the uncertainty because of the president’s on-again, off-again tariffs that’ll only cost people more money, he wrote—calling tariffs “a misapplied consumption tax on households and businesses that will soon cause a premature and unnecessary end to economic expansion.” 

What comes next? Hotter inflation and increasing unemployment, according to Brusuelas. 

In early April, President Donald Trump unveiled a sweeping tariff agenda. He later put some tariffs on ice to talk deals and instead placed a blanket tax on other countries, and a very hefty tax on China. China retaliated, so trade is strained among the two largest economies. Treasury Secretary Scott Bessent has put the onus on China to de-escalate the trade war because it sells more to America than the other way around, and called the tariffs unsustainable. Still, it’s unclear when a U.S.-China trade deal would occur because negotiations between the two have not begun, according to Bessent. 

The Port of Los Angeles anticipates a drop-off in imports because just under half of the port’s business emanates from China, its executive director Gene Seroka said earlier. 

“The price of those policies will be first paid at the ports and then spread to the rest of the economy,” Brusuelas wrote, noting Seroka’s prior comments on an anticipated drop in imports, totaling more than a third of typical cargo traffic. What does come in will cost more, and that will mean higher prices for consumers, Brusuelas explained. Not to mention, less traffic could mean a decline in dockworkers, truckers, and others’ earnings—and later, an increase in unemployment among supply-chain-related occupations.

“This has all the markings of yet another trade shock, resulting in a loss of employment and household income that will push the U.S. economy into recession,” he wrote. Brusuelas pointed to other recent occasions that disrupted supply chains and resulted in a plunge in container shipments to the Los Angeles and Long Beach ports, and subsequent economic damage: a trade war in 2018, the 2020 pandemic, and China’s 2022 zero-COVID policy.

While Trump’s tariffs led to a selloff in the stock and bond markets and a loss in confidence (which appears to have somewhat resolved itself), Brusuelas suspects dockworkers’ unemployment to rise before spreading to truckers and other supply-chain workers, and prices to increase due to a shortage of goods. “Demand will then drop, leading to a return of stagflation, not seen in more than 40 years,” he wrote.

Federal Reserve Chair Jerome Powell warned of a looming threat of stagflation, a nasty mix of elevated inflation and stagnant growth, because of the administration’s tariffs. Tariffs would not only induce inflation, but slow the economy, he said. It’s why the central bank is taking a wait-and-see approach, and why almost everyone sees the Fed leaving interest rates untouched Wednesday. The Fed has a dual mandate: stable prices and maximum employment. Tariffs threaten both, according to Brusuelas.