The concern here is not so much that China has been significantly impacted but that there will be “knock on” effects that ripple into the US economy. The shipping containers coming into our ports are only one third full indicating that a lot of products and manufacturing goods that US companies need to make and sell their own products are delayed.
If they sell out of their inventory quickly it could mean they will not have anything to sell this summer and their revenues will slump. If this happens they would have to lay off people which then cuts into the consumer confidence levels and people pull back on spending. This becomes a self fulfilling spiral that can lead to a recession.
If US consumers panic because they think there will be shortages it could suck up the inventory very quickly just like people do with gasoline when they think the supply is at risk because of natural disasters.
The lesson from this is exactly what President Trump was trying to do with the China Trade Deal. The underlying message to US manufacturers is that we can’t risk being so dependent on China to feed our economic pipeline. We fixed this problem with oil supplies by expanding our fracking so that now disruptions to the Middle East supply no longer panic our financial markets and risk armed conflict.
We need to bring back our own manufacturing to this country so that we limit our vulnerability to foreign disruptions for whatever reason. If China gets back on line quickly none of this will necessarily happen but our markets are predicting they won’t make it at this point.
Way over blown. The USA imports about $850B/yr from China and very little of that are components. The lion share of imports are FINISHED goods.