Topline
Inbound cargo shipments from China have plummeted since early April, just as retailers and their wholesale partners need to bring in inventory for the critical back-to-school through holiday shopping season, according to Bloomberg.
Each passing week of reduced shipments from China increases the prospects of “Covid-like” shortages … More
Key Facts
The number of U.S.-bound cargo ships from China are down about 40% from earlier this month and they are carrying about one-third fewer containers since President Trump announced 145% tariffs on Chinese imports.
John D. McCown, non-resident senior fellow at the Center for Maritime Strategy, reported that cargo carriers canceled 80 sailings from China to the U.S. in April, roughly 60% more than in any month during the Covid pandemic.
Even if what Treasury Secretary Scott Bessent called a “trade embargo” is resolved quickly – highly unlikely given current tensions – retailers are still looking at the possibility of critical inventory shortages for the second half of the year.
Key Background
In any normal year, retailers and wholesalers start to receive inventory for the back-to-school through holiday shopping season by mid-May through early June. While shoppers have yet to experience empty shelves because retailers pulled forward merchandise orders earlier this year, each passing week of reduced shipments increases the prospects of “Covid-like” shortages later in the year, Apollo Management economist Torsten Slok warned. Last week, the CEOs of Walmart, Target, and Home Depot met with President Trump at the White House to tell him much the same thing.
Crucial Quote
“It’s a fair statement to say that the container shipping sector has never faced the sort of macro headwinds that it is now facing,” McCown said in a research note.
No Quick Fix
If and when trade issues are resolved, it could overwhelm the retail supply chain system. It takes about 20 to 40 days for container ships to reach the U.S. from China, then up to ten days of transit time for goods to move from the ports to cities.
What To Watch For
The longer the China-U.S. trade impasse lasts, the worse the disruption will be. “Expect ships to sit offshore, orders to be canceled, and well-run generational retailers to file for bankruptcy,” Apollo Management’s Slok wrote in a research note. By the end of May, he said domestic freight demand will “come to a halt,” followed by significant layoffs in the trucking, logistics and retail industries in early June. Ultimately, it could lead to what he called a “voluntary trade reset recession.”
Further Reading
Trump China Tariffs Set To Unleash Supply Jolt On US Economy (Bloomberg, 4/28/2025)
Trump Trade War Update: Firm Predicts ‘Empty Shelves’ And Recession By June (Investor’s Business Daily, 4/28/2025)
Empty Shelves Are Coming, Apollo Economist Says — And So Is A ‘Voluntary’ Recession (Quartz, 4/28/2025)
