As exports from China plunge, the U.S. faces an impending shortage of goods; here's what Americans should know

Economic Times

01-05-2025

China exports to U.S. plunge as record-high tariffs take hold, leading to fears of product shortages across American stores. With U.S. import duties on Chinese goods now at 145%, major retailers like Walmart and Target warn shelves could soon empty. Container bookings from China have dropped as much as 60%, and shipping volumes at key ports like Los Angeles are falling fast. Small businesses say they may not survive these added costs. As trade tensions rise, the U.S. faces a critical supply chain crunch that could hit everyday items like clothing, furniture, and electronics. This is a story you can't miss.
China exports to U.S. fall sharply as 145% tariffs hit. Retailers warn of product shortages and rising prices. Ports slow, bookings drop 60%, and small businesses feel the pressure. Get the full story behind this growing supply chain crisis.
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The story of China exports to the U.S. plunging due to high tariffs is now unfolding in real-time, and it's starting to shake up the shelves of American stores. As the U.S.-China trade war escalates, shipments of goods from China are dropping fast—raising alarms among U.S. retailers, logistics companies, and even economists. With tariffs now reaching record levels, supply chains are being squeezed, inventory is thinning out, and price hikes could be next.The numbers paint a clear picture: shipments from China to the U.S. are plummeting. According to Flex port, a major supply chain company, container bookings from China have dropped by as much as 60%. The Port of Los Angeles, which handles a huge chunk of U.S. imports from Asia, reported a 10% year-over-year decline in shipments last week alone. Eugene Seroka, Executive Director of the Port of Los Angeles, said during an April 24 meeting that arrivals could drop by 35% in the next two weeks.Why such a steep decline? The answer lies in the sharp spike in tariffs. The U.S. now imposes up to 145% tariffs on Chinese goods, making many products more than twice as expensive as last year. China, in response, slapped 125% tariffs on U.S. exports. This tit-for-tat has made it nearly impossible for businesses to plan or afford cross-border trade.Retailers had tried to get ahead of the situation by stockpiling goods last year, but that buffer is about to run out. Once summer hits, stores may struggle to restock shelves.U.S. ports are already seeing the early signs. At the Port of Los Angeles, five key product categories are at risk: furniture, auto parts, clothing, plastics, and footwear. These are among the most common imports from China, and they're also everyday essentials for American households.Retail giants like Walmart and Target have directly warned the White House that continued tariffs could lead to inventory gaps and price hikes. 'There probably will be cases where prices will go up for consumers,' said Walmart CFO John David Rainey on CNBC. Similarly, Target CEO Brian Cornell warned that consumers should expect price increases within days.Small businesses are being hit hard too. Kristin Bear, who runs a U.S.-based lingerie brand Kilo Brava, said she might be forced to shut down. 'We'll just have to abandon the goods and close the company' if tariffs stay this high, she told CBS MoneyWatch.They're certainly trying. As China becomes more expensive to export from, other Asian countries like Vietnam and Thailand are seeing a boost. Flex port reports that bookings from these countries are up 5% to 10%, as manufacturers scramble to avoid the sky-high U.S. tariffs on Chinese goods.But shifting production isn't easy. It takes time, investment, and new supplier relationships. For now, many importers are simply pausing their shipments. A Freightos survey of 195 small businesses found that 33% have already paused imports to reassess their strategy.Shipping costs are also tumbling. Ocean container rates dropped from $8,100 in July 2024 to around $2,327 for a 40-foot container, according to Freightos. That's largely because ships are sailing half-empty, with fewer Chinese goods being loaded due to the tariffs.If this trend continues, we could see COVID-like shortages in stores, according to Torsten Slok, Chief Economist at Apollo Global Management. He warned that 'empty shelves in U.S. stores in a few weeks' are a real possibility. That includes not only finished goods but also intermediate goods used by U.S. manufacturers.For now, it's a waiting game. Importers, manufacturers, and retailers are all holding their breath, hoping for a change in tariff policy. But unless something shifts soon, China exports to the U.S. may remain stuck in a downward spiral, dragging product availability—and maybe even some businesses—down with them.High U.S. tariffs up to 145% have made Chinese goods too expensive for importers.Items like clothing, furniture, auto parts, and electronics may face shortages.