U.S. Treasury Secretary Scott Bessent and China’s Vice Minister of Finance Liao Min in Switzerland. Instead, they zeroed their efforts on shaping the future course of their developing trade relations between their two countries. The third LB JPA meeting was held on May 12, 2025. It included important participants such as our U.S. Trade Representative Jamieson Greer and China’s International Trade Representative, Vice Minister of Commerce Li Chenggang. This high-level engagement is an indication of the complicated state of U.S.-China trade as both countries seek to manage an ever-evolving economic environment.
Even with all the talk of creating a friendlier trade environment, President Donald Trump’s tariffs are still being felt hard. These tariffs are likely to increase costs for American consumers, offsetting the possible gains from diplomatic negotiations. As we’ve heard from experts, tariffs do more than just raise prices. A multitude of issues intersect, contributing to the cumulative consumer experience.
Rising Production and Transportation Costs
Doubts about electric trucks and pads Costs are mounting The first reason is that transportation costs have increased. This abrupt rise in demand, coupled with current tariffs of at least 30% are fueling the rise. Most businesses have increased their production capacity to meet more orders. They are paying much, much more — in some cases 15%, sometimes 25% more — to have things made in China.
Andrew Rader is the managing director of the consumer practice at Maine Pointe. He notes that raw materials for consumer goods such as plastics and metals have increased in price by more than 10% each. This rise in input costs presents additional challenges for American businesses striving to maintain profitability while navigating complex supply chain issues.
A significant number of firms are responding to the new environment by shifting inventory policies. Companies are suddenly faced with purchasing up to six months’ supply of ingredients in advance. This is a departure from the standard three-month payment cycle. This reorientation further demonstrates the need and urgency on the part of American companies looking to source goods before tariffs are permanently applied.
Implications for Consumer Prices
The consequences of these tariffs are felt beyond just the immediate price increases, as they impact consumer decisions. Andy Tsay, business and analytics professor at the Leavey School of Business at Santa Clara University, is quick to point out, though, that any additional costs or risks added to the supply chain must be justified somehow. Industry advocate Greg Haynes makes clear that all increased cost and risk in the supply chain needs to be accounted for and somehow reflected. It doesn’t even have to appear as a cost increase; instead, it can take less transparent forms.
As companies navigate through these broad new realities, many will find that the old ways they have always priced things isn’t going to cut it anymore. Instead of putting this episode behind them, Tsay encourages companies to educate themselves on this “forced experiment.” Even with tariffs removed, if consumers are now willing to pay more for those products, prices may not return to their original lows. While this is a positive development for consumers worldwide, it is a troubling indication that American consumers should expect long-term price hikes.
The Road Ahead
With talks still ongoing between U.S. and Chinese officials, the outcome of the U.S.-China trade relationship is unclear. As talks move forward, they hope to reduce at least some friction. Unfortunately, continuing tariffs and increasing inflation have created drastic hurdles for American consumers and producers alike. Companies are scrambling to fill orders and get goods shipped fast, all while trying to deal with premium costs from today’s market volatility.