80% of Small Companies That Purchase From China Will Die: Flexport CEO

The CEO of logistics firm Flexport has a grim forecast for what might occur if the US sticks to its tariffs on China.

The US’s 145% responsibility on Chinese language merchandise might result in “mass bankruptcies,” Flexport’s CEO, Ryan Petersen, mentioned on an episode of ‘”The Prof G Pod,” which aired on Friday.

“You are speaking like 80% of small enterprise that buys from China will simply die,” he mentioned. “And hundreds of thousands of workers shall be unemployed.”

The logistics CEO added that a variety of what Individuals purchase from China is “discretionary spend” — optionally available objects that may be changed in the event that they turn out to be costly.

“We have now clients that purchase pizza ovens in China, like to your yard. They’re actually cool merchandise,” he mentioned. “When the worth goes up 50% or extra, you may simply exit and purchase pizza from Domino’s or one thing, proper?”

He mentioned this is the reason he thinks the US might “again down” within the commerce battle with China.

The White Home didn’t reply to a request for remark.

Final month, Petersen mentioned clients really feel “paralyzed” round tariffs, particularly due to the method they’re being carried out. He mentioned no nation appears like a secure guess for provide chains, particularly after President Donald Trump positioned duties on Canada and Mexico, two of the US’s closest buying and selling companions.

Petersen based the logistics firm in 2013 and raised $935 million in 2022 at an $8 billion valuation.

‘Folks aren’t going to purchase’

Earlier this month, Trump mentioned he may be nearing a degree the place he would not wish to impose greater tariffs on China as a result of it might deter consumption within the US.

Chatting with reporters within the Oval Workplace on April 17, Trump mentioned he could not increase tariffs even when China goes past its 125% responsibility on US items.

“I could not wish to go greater, or I could not wish to even go as much as that stage — I could wish to go to much less, since you need folks to purchase, and at a sure level, folks aren’t going to purchase,” he added.

Earlier on the identical day, China’s Ministry of International Affairs mentioned it would not take note of Trump’s “tariff numbers recreation” after the White Home mentioned Chinese language exports face a levy of as much as 245%. Beijing beforehand referred to as escalating US tariffs a “joke” and mentioned they now not maintain “any financial significance.”

The US imported $438.9 billion value of products from China in 2024, in response to the Workplace of the US Commerce Consultant. China makes up over 13% of its whole imports.

Earlier this month, 5 owner-operated companies from totally different states and industries filed a lawsuit within the US Courtroom of Worldwide Commerce difficult Trump’s authority to impose tariffs by invoking the Worldwide Emergency Financial Powers Act. They argue that the tariffs violate constitutional limits on govt energy.

Giant companies are additionally warning of widespread financial disruption. Southwest Airways’ CEO mentioned final week that the US airline business is already in a recession.