President Trump’s aggressive tariff hike on Chinese goods is threatening to deliver a severe blow to the U.S. economy just as retailers gear up for the year’s busiest shopping seasons. With import duties on Chinese products raised to 145% in early April, cargo shipments from the world’s second-largest economy have nosedived — by as much as 60%, according to industry estimates.
Read also: China Eases Some Tariffs on U.S. Goods but Denies Trade Talks Are Happening
While the effects haven’t fully hit consumers yet, a supply shock is looming. By mid-May, thousands of American businesses — from mom-and-pop shops to major retailers like Walmart and Target — will need to restock. In a recent meeting with Trump, both companies warned that empty shelves and rising prices are on the horizon.
Torsten Slok, chief economist at Apollo Management, said the outcome could mimic early-pandemic conditions: product shortages, layoffs across logistics and retail, and economic ripple effects that persist through Christmas.
Though Trump has hinted at softening his stance, supply chains are already under pressure. Jim Gerson, whose Kansas-based family business supplies holiday decor to major U.S. stores, says his company has 250 containers sitting idle in China. “We have to get this worked out,” said Gerson. “And hopefully very soon.”
Even if the trade war cools, restarting transpacific commerce won’t be simple. Ocean freight companies have slashed capacity to cope with plunging demand. A sudden rush of orders could overwhelm ports, trucks, and rail networks — a repeat of pandemic-era gridlocks, says Lars Jensen, CEO of Vespucci Maritime.
Retailers typically ramp up orders in March and April to prepare for back-to-school and holiday seasons. But many shipments due to hit the water now are stalled. Jay Foreman, CEO of Florida-based toymaker Basic Fun, says his customers — including Walmart and Amazon — have paused orders and could start canceling if tariffs persist. “We’re in a period where the damage is manageable,” he warned. “But every week, the damage level increases.”
Early signs of disruption are already visible in Asia. Bloomberg ship tracking shows a 40% drop in container vessels heading from China to the U.S. since April, with a third fewer containers on board. Some importers are rushing to shift sourcing to Southeast Asia — Cambodia, Vietnam, and Thailand — but it’s not enough to make up for the plunge in Chinese goods.
Hapag-Lloyd, a top container carrier, reports a 30% cancellation rate on U.S.-bound bookings from China, even as demand rises from other countries. Still, the sudden trade pivot is difficult to execute without logistical bottlenecks.
Canceled sailings are stacking up fast. April alone saw 80 China-to-U.S. route cancellations — 60% more than the worst pandemic month — a sign of extreme stress in the container shipping market, according to industry veteran John McCown.
The World Trade Organization now forecasts a staggering 80% decline in U.S.-China goods trade if current trends continue. Treasury Secretary Scott Bessent has likened the situation to a de facto embargo.
The uncertainty is triggering inflation fears, with some imported goods from China expected to double in price. Economists are increasingly warning of a potential recession, with imports projected to fall at a 7% annualized rate in Q2 — the steepest drop since early 2020.
With holiday season deadlines fast approaching, suppliers are bracing for tough choices: cancel orders, raise prices, or cut costs — including jobs. Some may be forced to take on debt, risking a credit crunch, warns Steven Blitz, chief U.S. economist at TS Lombard.
“This is starting to feel like the early days of Covid,” said Foreman. But unlike the pandemic, when stimulus and eventual rebounds buoyed demand, a prolonged tariff standoff offers no clear upside. “This could be more treacherous,” he said. “The damage could be worse — but the fix could come quickly, if the tariffs are lifted.”
