Meanwhile, economists, local business leaders and other experts from across the country described crucial regional industries muddling along without a great deal of momentum. They say they’re suffering from a lack of clarity surrounding policies coming from Washington. The signs of trade-related distress are everywhere As we head into Memorial Day weekend, which typically launches a season of spending on things like travel, all across the country, businesses and households are feeling the strain of unintended consequences from ongoing U.S. trade wars. New York City and Yellowstone National Park are bracing for fewer foreign tourists. States like Texas and Michigan are suffering from disrupted cross-border trade flows that had been a way of life. The Energy Belt along the Gulf Coast has been slammed by falling oil prices that threaten jobs. And West Virginia is worried that its coal exports might be caught in the crossfire. The economy seems to be still growing as the summer approaches, to be sure. The Trump administration’s temporary reduction of high tariffs on China and other countries to allow for negotiations has removed some of the stress in financial markets that had hit 401(k) plans on Main Street. Wall Street economists have dialed back their expectations of a recession now compared to a few weeks ago. But while not “code red,” the odds are clearly not back to “all clear.” At least one region, Washington D.C., seems headed into a recession, if it’s not already there ”It is hard to see any bright spots when you look at the overall economic picture,” said Yesim Sayin, executive director of the D.C. Policy Center, an independent research firm focusing on the local economy. The city, once thought to be recession-proof, is slowing down markedly after the Trump White House engineered sweeping job cuts at the federal level. “A recession is both the right and wrong word. It is a recession in the sense that the region’s GDP is going down,” Sayin said. The federal government is acting as a deadweight on the local economy, she added. But the city is not experiencing much pain because many residents still have high-income jobs. There are no sudden stoppages, just a lack of vibrancy, with many restaurants and businesses closing, she said In other regions, all the optimism, especially from small businesses, after Donald Trump took office again in January has evaporated after the president launched the biggest trade war since the 1930s. It’s not just the tariffs themselves, either. It’s all the uncertainty spawned by rapid shifts in the White House’s approach. The administration has made more than 50 changes in its tariff strategy in just the past few months, leaving businesses and consumers unsure about what comes next. The result: Hiring has slowed, businesses have become hesitant to invest and Americans have dialed back their spending. “The natural reaction to uncertainty is to do nothing” said Ray Perryman, CEO of the Perryman Group economic analysis firm in Waco, Texas. Emptier shelves and rising prices The signs of trade-related distress are everywhere. For starters, ports from the East Coast to West Coast have seen a reduction in traffic as shippers grapple with higher tariffs. The Port of Oakland, Calif., for instance, reported a 15% drop in imported products in April. Other major ports have reported similar declines. The temporary reduction in trade could lead to scattered shortages on retail shelves in the next month or two. American shoppers might not find everything they need, experts said. Prices could also rise for consumer staples since tariffs are still much higher now, even after the Trump administration walked some back, than they were before the trade war started. “We are the country’s gateway for fruit,” said Jeff Hornstein, executive director of the Economy League of Greater Philadelphia. “Most of the fruit on the East Coast comes through the port of Philadelphia and tariffs are going to affect that over time.” The cumulative effect of tariff-related price increases, in turn, is likely to nudge U.S. inflation higher, at least temporarily. The Federal Reserve has been aiming to lower the rate of U.S. inflation to 2% and it wasn’t far from its goal before the trade war started. Now economists predict inflation will creep higher, and perhaps climb toward 3% by year’s end from the current rate of 2.3%. “We are over the worst of the [trade] fights, but we haven’t yet felt the impact of inflation,” said Jeffrey Korzenik, chief economist at Fifth Third Bank. He expects the inflation rate to “settle above the Fed’s 2% goal.” Even just a small increase in inflation presents its own problems. Most notably, the Fed might not be able to cut interest rates and give a flagging U.S. economy a boost. And consumers will have less money left over from their paychecks for discretionary spending. Tourism industry likely to suffer The flow of foreign-made goods has not been the only thing to slow. Fewer tourists from Mexico, Canada, China and other countries are expected to visit the U.S. this year. “Leisure and tourism is everyone’s problem now,” said Hornstein of the Economy League in Philadelphia. The famed Yellowstone Park, for example, has seen a big influx in Chinese visitors in recent years — so much so that many entrepreneurs have put up signs in Mandarin to attract their business. “People aren’t sure if Chinese tourists are going to be able to visit,” said Megan Lawson of Headwaters Economics, an independent nonprofit in Bozeman, Mont., that specializes in community development. “Rural Western communities depend on tourism,” said Lawson, noting they make up a big part of the economy, especially for towns on the edge of federal lands. The trade war will probably take a bite out of the Big Apple, too. The city’s tourism agency was expecting record visitors this year, but now it predicts 400,000 fewer people will travel to New York City compared to 2024. The worries extend beyond this year to 2026 as well. Hornstein said Philadelphia was banking on large crowds for the World Cup in the U.S. until the trade war erupted. Whatever the case, fewer tourists means less money spent. And that means fewer jobs for Americans at hotels, restaurants and retail stores and so forth. “These are closely tied to tourism,” noted Cole Rakow, assistant director for economics at the nonpartisan Independent Budget Office for New York City. In a new analysis, the IBO predicted the number of net new jobs created in 2025 in New York City — hiring minus layoffs — is likely to slow to just 32,000 from 119,000 in the prior year. If the slowdown in hiring in New York City is replicated across the country, the U.S. could add the fewest jobs in 2025 in 15 years if the pandemic is excluded. The damage doesn’t stop there. Less spending and hiring is also going to lead to less tax revenue than government officials were planning on. Budgets are going to get tighter and cities and states will need to make more tradeoffs. Borders states are particularly vulnerable Not every state will suffer the same. The most susceptible to big disruptions are border states and those with larger ties to the global economy, economists said. Take Texas, whose economy is closely intertwined with northern Mexico. “It is not at all uncommon for products such as electronics and automobiles to cross the border multiple times during the manufacturing process,” Perryman of the Perryman Group said. Even though the Lone Star State is still growing, he said, businesses have been frozen with indecision, especially since tariff rates keep changing. States such as Michigan and Ohio, with big auto industries and close ties to Canada, face the same stress as they try to navigate abrupt changes in trade rules. The cost of buying a new car, already near a record high, could become even more expensive and dent auto sales. Immigration crackdown could hamper some regions Tariffs aren’t the only Trump administration policy causing headaches for business. The crackdown on immigration could also add to the stress. A recent analysis from the labor-researcher Burning Glass Institute, an independent nonprofit research center, found that 7% of the U.S. workforce consisted of unauthorized immigrants. Some big states, such as blue California, where 12% of the workforce is made up of unauthorized immigrants, and red Texas, where 10% of workers are unauthorized immigrants, rely heavily on these workers to power their economies. Whatever the merits of stricter immigration rules, economists say, they could end up worsening labor shortages in key industries such as agriculture and construction and potentially raise the cost of food and housing, two of the biggest expenses for households. What would help the economy greatly is a resolution of the trade disputes, ideally before temporary tariff reductions expire. Even if the White House were to impose, say, 10% tariffs on other countries, most businesses could handle the new duties without too much difficulty so long as the trade war then went away. But until then, the economy is expected to just muddle along. CEOs, economists and government officials in cities and states see grudging U.S. growth in the near future — along with a higher dose of inflation. “The picture has not been great for 2025,” said Ted Egan, chief economist for the city and county of San Francisco.