When the community pandemic hit, Chinese factories were closed and global shipping traffic slowed. Within a few weeks, products began to disappear from shelf in US stores, and American companies relying on foreign materials had gone out of business.
A similar trend is unfolding, but this time the catalyst is President Trump's decision to raise tariffs on Chinese imports to a minimum of 145%, a sudden volume that will halt much of the US-China trade. Fewer large container ships ingesting the ocean between China and the US ports, and far fewer Chinese products will arrive on American shores in the coming weeks.
High tariffs on Chinese products have been in place since early April, but the availability of Chinese products and the prices paid by consumers have not changed much. However, some companies are now beginning to raise prices. Experts also say the impact will become more and more evident in the coming weeks as waves of tidal changes, which stem from cancelled orders at Chinese factories, heading towards the US worldwide.
About a third of the ships plummeted in April, the number of giant container ships carrying metal boxes of toys, furniture and other products departing China for the US.
The reason why consumers still don't see much of an effect is that it takes 20-40 days for container ships to travel through the Pacific Ocean. It will then take another 1-10 days for Chinese goods to travel the roads by train or truck to various cities across the country, an economist at Apollo Global Management wrote in a recent report. This means that higher tariffs on China, which came into effect at the beginning of April, mean that the number of ships arriving at US ports is only beginning to decline.
By late May or early June, consumers can start looking at empty shelves, potentially causing layoffs in retailers and logistics industries. Apollo economist Torsten Sloak said the major impact on the US economy of shutting down trade with China will begin to become clear in the summer of 2025, when the US could plunge into a recession.
“In the next few weeks, U.S. consumers will see empty shelves at clothing stores, toy stores, hardware stores and retail drug stores. Also, prices for items still on the shelves will be higher,” he said.
Molson Hart, CEO of toy company Viahhart, wrote to X: “It appears to be speeding towards the brick wall, but the driver hasn't seen it yet.
The decline in Chinese imports will be amplified on Friday when the US eliminates the so-called de Minimis treatment of Chinese products. The rules allow products up to $800 to avoid customs duties as long as they are shipped directly to consumers. It boosted the business models of companies like Temu and Shein, resulting in a surge in packages that were handled individually in the US.
Advocates of change say the tariff loophole has given Chinese shippers an unfair advantage and hurt American businesses. But the decision to remove it has already led to higher prices for US consumers. And the change is expected to weigh airlines like FedEx and civil airlines with stable businesses offering small-scale products.
Dock workers and logistics companies expect their own confusion. Imports have skyrocketed in recent months at the Port of Los Angeles, the main entry point for Chinese products that arrived in the US, as businesses and consumers tried to stock items before they came into effect. However, its activities are now beginning to decline.
The number of containers arriving at the Port of Los Angeles is expected to fall by more than 35% next week compared to the same period last year, port data shows. Jeanseroka, the port's executive director, said a quarter of the ship scheduled for May was cancelled due to light weight.
About two weeks ago, there were “very few and far between” products coming into the port from China, Celoka said.
Data also suggests that heavy truck sales are declining sharply, suggesting that logistics companies are hoping to move fewer items in the future.
Trade experts say businesses have stockpiled enough stock in recent months. If the White House quickly reverses the course and drops China's tariffs significantly, it can avoid much of the pain of the US economy and consumers. Data from the Institute for Supply Management shows that US stocks are at the highest level in over two years.
Teneo's Managing Director Gabriel Wildau has advised businesses to do business with China, saying that the Chinese goods that US retailers stockpiled in the first three months of the year will be offered to stores before they need to raise prices. However, if the situation does not change quickly, he said US consumers will feel the impact of trade changes will unfold for the next three to six months.
“We have higher prices and in some cases we have empty shelves,” he said.
Trump officials have admitted there could be some confusion among consumers. The president appears to have acknowledged Wednesday that his trade changes could lead to a decline in goods and rising prices.
“You know, someone said, 'Yeah, the shelves are open,'” Trump said from the White House. “Well, maybe kids will have two dolls instead of 30 dolls, do you know? And maybe two dolls would cost them a few dollars than they normally would.”
However, administrative authorities say the pain will be kept to a minimum. At a White House briefing Tuesday, Treasury Secretary Scott Bescent said he didn't expect to see the supply chain shock from US tariffs in China. “I think retailers are keeping their inventory right now,” he said.
Some companies in a more vulnerable financial position are unable to stockpile and are forced to go out of business quickly. Even if the Trump administration finds a way to reduce tariffs in China, it is not clear that collection will drop sufficiently to reopen trade meaningfully.
Many companies say that tariffs above 50% on Chinese imports are sufficient to halt trade entirely. At present, tariffs are at a minimum of 145%, and in some cases much higher, that means the Trump administration may have to drop China's tariffs by at least 100 percentage points to significantly resume the flow of goods.
Trump officials said they believe the current tariff rates with China are unsustainable, but are concerned about China's trade practices and are under pressure to show that they have secured important concessions from China in exchange for a drop in tariffs.
Ryan Petersen, chief executive of supply chain company Flexport, said that even before the president raised China's tariffs to 145% in April, the Trump administration's tariffs on China were high at a minimum of 54%.
“The reality is that 54% was already a very high tariff rate,” Petersen said. “It depends on how far they walk through it. If they turn it back to 25%, this could all be an event.”
It is very unclear as to where global trade is heading, and companies are frozen in plans to halt expansion and new orders.
Data shows that new orders from manufacturers have been significantly reduced this year, with businesses cutting capital expenditure plans. Some major companies have stopped issuing sales and profit guidance. Mercedes-Benz suspended its 2025 financial forecast on Wednesday, as did Stellantis, which creates the Chrysler, Dodge and Jeep brands.
It is not clear how quickly the current supply chain challenges can be solved. However, during the pandemic, supply chain disruptions took much longer to run through the economy than most predictors had expected.
Initially, economists expected a price rise to be temporary, but were surprised by the inflationary pressures that had remained for years. Small impacts were snowballing methods through the supply chain. For example, disruptions in supply from one or two companies that make small parts for cars and other machines could halt major manufacturing plants.
And when the economy was turned on again after the initial pandemic turmoil, the process wasn't smooth. Americans saw piling and shortages at ports of some goods, all of which ultimately contributed to higher prices.
Petersen said the companies that operate container ships have cancelled a quarter of all voyages from China and are re-routing the ships to travel to Southeast Asia and Europe instead. He said the ship would soon be in the right place to carry the same amount of goods, even if the Trump administration removes Chinese tariffs and revives US consumer demand for Chinese products.
“You'll see higher prices, you'll see delays,” Petersen added. “The more you wait for changes, the more serious the shock will be.”
Daniel Kay contributed to the report.
