One of the defining memories of the Carter presidency is of lines at the gas station. Could one equivalent for the second Trump term be shortages at the store?
One of the defining memories of the Carter presidency is of lines at the gas station. Could one equivalent for the second Trump term be shortages at the store? The way things are going, quite possibly.
A number of companies have recently been sounding the alarm about product shortages in the wake of the administration’s tariff increases, and freight data are lending credibility to those warnings.
For the week ending May 3, the number of freight vessels leaving China and headed to the Southern California ports, the main U.S. ports receiving Chinese freight and other Asian trade, is down 29% week-over-week, according to Port Optimizer, a tracking system for ships. Year-over-year, the data shows a 44% drop in vessels scheduled to arrive the week of May 4-May 10.
When supply lines start to unravel, they do so in ways that can be unpredictable. That is part of the danger they represent, as we were reminded during and after the Covid-19 pandemic. But some of the early consequences of Tariff-25 come as no great surprise. The collapse in the cross-Pacific freight trade, along with early tariff-induced signs of economic weakness was bound to have knock-on effects for U.S. truckers, and that, it appears, is what is happening.
NBC:
U.S. trucking is heading for a slowdown, with industry players fearing the “worst is yet to come” as tariffs start to crimp imports.
Trucking volumes have plunged to near pre-pandemic levels, according to Craig Fuller, founder of the logistics industry publication FreightWaves.
There may be a bump as, say, retailers start stockpiling and other importers sneak through the window left open by the pause, but then what?
Forbes (April 17):
Volvo Group and its subsidiary Mack Trucks confirmed recent layoffs at some East Coast facilities, impacting hundreds of employees, as the companies are the latest to cut workers while citing the possible market impact of President Donald Trump’s tariffs.
Even an unwise policy can be implemented in ways that minimize the damage. The administration has always accepted that the tariff increases were going to lead to a (an allegedly) bumpy patch, but it does not appear to have thought of ways, consistent with its longer-term goals, in which it could ease that bumpiness: Fanaticism is what it is, and the Tariff Taliban are what they are.
The manner in which the higher tariffs have been and are being implemented will mean that this (allegedly) brief period of turbulence will do even more economic and political damage than was always going to be the case, something that is likely to prove self-defeating.
Some (not many, but some) of the administration’s trade goals are worth supporting, notably the intention to reduce this country’s dangerous dependence on China, but the way to do this was in incremental and carefully targeted stages, a “conscious uncoupling,” as Gwyneth Paltrow might have put it. But the broad sweep and scale of the tariffs as well as the abruptness of their introduction has been the opposite of that. For example, the suspicion of “trade” that runs through the entire tariff strategy has meant that much higher tariffs will be imposed on goods from countries that could otherwise provide a plausible substitute for made-in-China. U.S. companies may not have the capacity (or, if the economy stumbles) resources to fill the gap any time soon. This, sadly, is not the only example of how that suspicion may work in Xi’s interests, with shortages coming, it is expected, before too long.
CNBC:
Within a few months of a prolonged trade war, supply chain executives say the first signs of empty shelves would show up where price-sensitive imports dominate — toys, low-cost apparel, and budget home goods.
Warnings of empty store shelves have been in the headlines as multiple press reports indicate that CEOs of America’s top retail stores told President Trump that a prolonged trade war would lead to shortages. . . .
Supply chain experts say that lower-end stores will be hit hard by tariffs on low-cost imports and if they run lean on inventory, which will be seen much faster.
“The U.S. retail system is built on speed and scale,” said Casey Armstrong, CMO of ShipBob, a global fulfillment and supply chain platform. “When that engine stutters — whether from tariffs, customs delays, or sourcing constraints — it’s the lowest-margin, fastest-moving goods that disappear first.”
Armstrong warned the first signs of empty shelves would show up where price-sensitive imports dominate the shelf — like toys, games, and budget home goods, in addition to apparel. “These are the canaries in the coal mine of a disrupted supply chain,” he said.
Other items at immediate risk include “toys and seasonal kids’ goods.”
The Trump that stole Christmas is not a good look.