Retailers warn of empty shelves as US-China trade war disrupts shipments

Many logistics firms are storing goods in warehousing or rerouting through Canada to wait out the tariff war

The impact of US President Donald Trump’s escalating trade war with China have begun to show through the broader US economy, as container port operators and air freight managers report steep declines in shipments from China, according to a report by the Financial Times. Retailers like Walmart and Target have already warned of empty shelves and higher prices soon.

 

Since the imposition of 145 per cent tariffs on Chinese imports, logistics firms in the US have observed a sharp fall in container bookings. The Port of Los Angeles, the principal gateway for Chinese goods, anticipates a 33 per cent drop in scheduled arrivals in the week beginning May 4 compared to the same period last year. Air freight companies have similarly reported substantial reductions in bookings.

 

 

Shipments to US drop amid uncertainty

The timing could not be worse for retailers, as March and April traditionally mark the beginning of preparations for the back-to-school and Christmas shopping seasons in the US. Suppliers typically need to ship goods now to ensure shelves are stocked later in the year. Continued uncertainty may lead many firms to cancel orders entirely. 

 

Cost of entering US markets highest since 1930s

A recent International Chamber of Commerce survey across over 60 countries found that expectations are increasingly pessimistic, with most respondents predicting permanent damage to trade regardless of any future agreements. Moreover, the cost of accessing the US market is now at its highest since the 1930s, with acceptance growing that a baseline tariff of at least 10 per cent will become the new norm.

 

According to Vizion, as cited by Financial Times, a container tracking service, standard 20-foot container bookings from China to the US had plummeted by 45 per cent year-on-year by mid-April. The upheaval reflects widespread hesitation among traders, who are delaying decisions while awaiting the outcome of potential negotiations between Washington and Beijing.

 

No end in sight of US-China trade war

While both Washington and Beijing have introduced some tariff exemptions on critical products, hopes for swift negotiations appear slim. Although Trump has suggested that the 145 per cent tariff could be reduced significantly, China announced on Friday that no talks were underway. 

 

Cancelled bookings, shipments on hold

With the first tariffed shipments due to arrive in the US imminently, freight companies say supply chains are already adjusting. Many businesses are sitting on inventory at both origin and destination points. Some US importers are using stockpiled goods, storing inventory in bonded warehouses to delay tariff payments, or diverting shipments to Canada.

 

Chinese clients have reportedly cancelled approximately 30 per cent of their existing bookings, and cargo volumes continue to tumble. According to a report by Bloomberg, analysts estimate that container traffic has declined by as much as 60 per cent since early April. While the full impact has yet to be felt by most Americans, industry executives warn that effects will soon hit retailers and consumers alike.

 

Walmart, Target warn Trump of empty shelves

Major retailers, including Walmart and Target, have already cautioned Trump that empty shelves and price increases are imminent. Looming shortages have also been linked to those experienced during the Covid-19 pandemic. Like the pandemic, this could lead to significant job losses in trucking, logistics, and retail. 

 

US recession fears loom

A recent Bloomberg report also noted that economists now view a US recession as almost a coin toss, with imports projected to fall at a 7 per cent annual rate in the second quarter — the sharpest drop since the pandemic’s onset. Inflation forecasts have also been revised upward, as reduced supply is expected to drive prices higher. Some goods from China could see their price tags double.