How Tariffs Could Cause Shortages in American Stores
Tariffs make it more expensive to bring goods into the United States, and one of the primary consequences of artificially inflating the cost of imports is that you get less of them.
Possibly a lot less.
American retailers are bracing for supply chain disruptions that could lead to price hikes and shortages as soon as next month—and might continue for a while, even if the Trump administration backs down from its trade war with China.
Cargo volumes to American ports are expected to “significantly decline because of canceled or delayed orders due to the tariffs,” says Jonathan Gold, vice president of supply chain and customs policy for the National Retail Federation (NRF).
That’s particularly true for any business that depends on imports from China. Although the administration has issued exemptions for several items—consumer electronics, computer chips, pharmaceuticals—other Chinese imports are now subject to tariffs as high as 145 percent. In other words: For every $100 of clothes, toys, luggage, sporting goods, or household items that arrive on a container ship, an American company must pay $145 to bring those goods into the country.
When the imports continue, those costs will be passed along to the consumer. But in many cases, the imports might not happen at all, because the tariffs are simply too high.
“While the impacts of lower import levels on retailers and consumers are currently unknown, it will ultimately depend on individual retailers and their specific mitigation strategies,” says Gold. “Potential impacts could include less inventory and fewer choices for consumers as well as increased prices, especially at small retailers.”
The telltale sign of those coming disruptions is the sharp decline in ocean freight heading for the United States. The Port of Los Angeles, for example, currently expects to receive just 14 foreign vessels in the week of May 4 through May 10. That would be a 36 percent drop from last year. A bigger drop looms: Ocean freight bookings from China to the U.S. are down 60 percent since the tariffs took effect, according to Flexpo
Article from Reason.com
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