Shortages from China trade war will hit shelves in stages

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.

When could that become a reality, and what product categories would be hit first?

Treasury Secretary Scott Bessent recently described a trade war with China as “unsustainable.”

Already, a decline in manufacturing orders from China, and a plummet in Chinese freight vessel bookings and sailings to the U.S., are edging the national supply chain closer to a tipping point. But when does the supply chain reach the point of no return, when currently paused orders need to be re-upped for the retail supply chain to be replenished?

Apparel and footwear are one key consumer product area to watch. In 2024, imports from China accounted for about 37% of all U.S. apparel imports and approximately 58% of all U.S. footwear imports.

“These prohibitively high new tariff rates operate as an import ban,” said Steve Lamar, president of the American Apparel and Footwear Association.

According to the AAFA, in 2024, the average tariff rate for apparel and footwear imports from China was about 18.5%, but for many, it is much higher due to additional duties. “When you add 145% on top of that, you get an average figure exceeding 160%, but in some cases, the actual tariff exceeds 200%,” Lamar said.

Because such a large portion of apparel and footwear comes from China, the effective date of the tariffs gave companies little opportunity to shift sourcing. “They will translate soon into product shortages as orders are canceled or goods are held in warehouses until a trade deal can be worked out,” Lamar said.

Companies are expecting many impacts, from price increases to consumer wariness, and orders of big-ticket items have surged on the expectation of sticker shock. Recent U.S. shipments data illustrate the tariff mitigation measures the companies are deploying to manage the delicate balance of supply and demand. A pullback in Chinese imports has been seen in recent Walmart, IKEA and Target orders, according to data from SONAR.

Declining Chinese freight ship visits to U.S.

But the risk of retail shortages will depend largely on how long the “unsustainable” tariff levels last, and the extent to which companies frontloaded inventory in the early months of 2025 based on Trump’s threats. A Chinese government minister recently said, “At present, there are absolutely no negotiations on the economy and trade between China and the U.S.” 

If the tariffs do indeed go lower and are considered more manageable to absorb, production orders could resume and shipments could begin again. But if the high tariffs continue, expectations are that the U.S. consumer will be faced with more persistent shortages, especially as Chinese suppliers concentrate on other markets. If that happens, the U.S. supply chain would then have to compete for…