Retailers are warning that U.S. consumers could once again be faced with empty store shelves and the kind of supply chain snarls that marked the Covid era if President Donald Trump’s tariffs on China remain at their current levels.
Companies have been canceling their shipments of goods from China and halting new orders after Trump put a 145% tariff on nearly all Chinese imports this month. As a result, the number of freight vessels scheduled to arrive at the Port of Los Angeles is on track to be down 33% year-over-year for the week ending May 10, according to ship tracking data from Port Optimizer.
Typically, U.S. retailers would be ramping up their orders for two critical periods later this year: the fall back-to-school shopping season and the winter holidays. And the pullback is creating uncertainty about whether U.S. shoppers will have the selection of goods they’ve grown accustomed to in the coming months.
“They’re making their holiday buying decisions now,” said Jonathan Gold, vice president of supply chain and customs policy for the National Retail Federation. “It’s a challenge for folks to figure out how to properly order and price with all the uncertainty that’s out there on the tariffs.”
At the current tariff rate, a U.S.-based company would have to pay at least $145 in tariff fees to Customs and Border Protection to import an item valued at $100, except for electronics and pharmaceuticals, which are levied at a lower rate. That fee could wipe out any profit a company would be making and force it to sell its products at a loss or raise prices to levels that consumers might not be willing to pay.
Chinese vendors told NBC News this month that American companies, including Target, have halted orders. A vendor who sells press-on nails to U.S. retailers said that her products are ready to ship but that they have been sitting in China. She doesn’t expect to be sending any products to the United States in the first half of the year.
The National Retail Federation expects imports to drop by 20% in the second half of the year if the tariffs continue at their current rate.
Some of the products likeliest to go missing from store shelves in the coming months will be lower-cost footwear, apparel, toys and electronics, for which manufacturing is heavily concentrated in China, Gold said. Other perishable items coming from China, like apple juice and fish, have limited shelf lives and were more difficult for retailers to stockpile.
“Like back during Covid where we had shortages of toilet paper, we are going to start seeing that in more and more goods,” said Sean Stein, president of the U.S.-China Business Council. “Starting in a couple of weeks, we are just going to start running out of stuff, and if the administration waits to resolve the problem until we have shortages and hoarding, that is just too late.”
The threat of empty store shelves has appeared to raise alarm bells inside the White House, more so than months of warnings from businesses about rising prices, said a person familiar with business lobbying efforts around tariffs. Trump administration officials seemed particularly concerned about a shortage of products around holidays, like the Fourth of July and Christmas, the person said.
After a meeting with major retailers this week, Trump said Wednesday that he was considering reducing the tariffs on China, though he hasn’t taken any formal action. He said Thursday that his administration met with Chinese officials, but earlier in the day, Chinese officials denied there had been any formal trade talks with the United States.
While some retailers had been surging shipments from China ahead of the tariffs, buying them some time to get through the summer, that wasn’t an option for many smaller businesses that typically don’t have the money or leverage with their manufacturers to ramp up production levels.
Jessica Berger, founder and CEO of the pet company Bundle x Joy, wasn’t able to stop her company’s latest shipment of dog toys and other pet accessories from leaving China before the 145% tariffs went into effect.
Now, she faces a $180,000 tariff bill from Customs and Border Protection when the items arrive in the United States. Berger said her company, which also gets revenue from its pet foods made in the United States, will be able to use existing financing to cover the cost of the tariffs, but that’s not the case for all small businesses.
“Luckily for me, I have the resources, but six months ago, I wouldn’t have. It would potentially have put me out of business,” said Berger, who sells her products in national retailers like Walmart. “That’s how tight cash is as a small business. We don’t have massive lines of credit and all of these different things.”
Since nearly all dog toys are made in China, Berger doesn’t see an alternative for manufacturing. And for her future product orders, like those she’s committed to sell to retailers during the holidays, she said she will have to increase her prices to cover the cost of the tariffs if those duties remain much longer. But she has also been hearing from other small businesses that are halting their China production.
“I think that you’re going to see a very limited supply of discretionary items, and the consumer may just not be buying as much because the products won’t be available, and if they are, they’re going to be much more expensive,” she said.
For importers who aren’t able or willing to pay the tariffs on their goods arriving in the coming weeks, that could result in thousands of unclaimed containers of goods at U.S. ports clogging the supply chain, similar to during Covid, said Stein.
“We could have thousands of containers stuck gumming up the port,” said Stein. “It’s going to be a train wreck.”
Even if Trump were to reduce the tariffs, the disruption caused to the supply chain could take weeks or months to unravel, given the time it takes for ships to across the Pacific and for the other pieces of the supply chain to snap back into place.
“You have an eight-week period where volumes are going to crash before they can even come back up, and that’s if things return to normal,” said Dean Croke, principal analyst at DAT Freight and Analytics. “All this comes at a time of the year when volumes really should start to increase.”
He said the reduced flow of imports into the port will have a trickle-down effect on the rest of the shipping industry. Trucks that were hauling goods out of the port will now shift elsewhere, flooding the trucking market with excess capacity and driving down the rates truckers get paid to haul their goods. That drop-off in demand for drivers, along with a slowdown in other areas of the economy, like manufacturing and homebuilding, could cause truckers to leave the industry and contribute to a shortage of drivers later.
“It may take well into the second half of this year before truckload volumes recover,” Croke said. “Even if everything went back to normal now.”
