Trump Trade War: Tariffs Boost Revenue but Pressure Corporate America

Moreover, the corporations with thin margins struggle to pass these costs on to customers. Auto manufacturers, airlines, and food companies face this pressure daily. The result is weaker earnings and pressure on profitability. However, some stock prices remain elevated due to broader market optimism.

A Shrinking Trade Deficit Masks Supply Chain Shifts

America’s trade deficit with China fell to just $9.5 billion in June, the lowest since 2004. Moreover, the overall goods and services deficit also dropped to $60.2 billion, matching 2023 levels. In theory, this marks progress toward a more balanced trade profile.

However, this decline is not necessarily a sign of economic strength. Most of the drop stems from a surge in early 2025 imports ahead of new tariffs. Meanwhile, surpluses for Taiwan and Vietnam hit record highs. This suggests trans-shipping from China is distorting trade flows.

On the other hand, the trade with Germany and Canada also dropped. While this reduces dependency, it disrupts existing supply chains. The shifting trade routes may reduce the deficit, but may not always benefit domestic producers.