The supply chain isn’t collapsing overnight — but it is bleeding out

Higher tariffs are hitting Americans where it hurts: their wallets, their farms, and their financial security. But is there worse to come?

People shopping at Costco in April 2025.

You’ve probably seen posts and articles in mainstream and independent media warning of coming shortages and empty shelves. Since we are nearing an inevitable economic cliff, some degree of panic is understandable. The US-China trade war is certainly rattling global supply chains and pushing prices higher. But while the damage is real and deepening, this isn't necessarily the sudden collapse some are bracing for. The story is slower, more grinding, and, in some ways, harder to fix.

When might the shelves run dry?

First of all, let’s take a look at the shipping situation. You haven’t seen shortages on store shelves yet because of the time it takes for ships to reach our shores and for goods to be transported and distributed. But, cargo shipments from China are estimated to have fallen by as much as 60% since the tariffs hit. CBS News reports that canceled or postponed cargo sailings caused by a lack of volume are now “at levels not seen since the COVID-19 pandemic.” The Tax Foundation estimates US imports will shrink by nearly a quarter this year, amounting to around $800 billion in goods that will not be seen in our economy.

Many retailers had the foresight to front load inventory before the tariffs kicked in, buying themselves a few extra months of breathing room. But even with that buffer, existing stockpiles can only stretch so far. In categories where China has near-total dominance — toys, electronics components, and low-cost manufactured goods, to name a few — there aren't enough alternative sources ready to pick up the slack.

The CEOs of Walmart, Target, and Home Depot recently warned President Trump that tariffs could lead to higher prices and empty shelves soon (starting around mid-May).

What will this mean for your household budget?

Yale’s Budget Lab estimates the tariffs will end up costing the average household around $2,600 this year. Construction prices are surging too, with builders reporting that new homes may be almost $11,000 more expensive on average due to tariff impacts.

Low cost goods, which have low margins, may be among the first to disappear from shelves.

While the US doesn’t import much food from China, grocery prices are creeping up too, because of rising costs in packaging, equipment, and logistics. Dollar stores, which are highly dependent on cheap Chinese goods, have signaled they may be the first to run short on inventory.

From CNBC:

“The US retail system is built on speed and scale,” said Casey Armstrong, CMO of ShipBob, a global fulfillment and supply chain platform. “When that engine stutters — whether from tariffs, customs delays, or sourcing constraints — it’s the lowest-margin, fastest-moving goods that disappear first.”

Armstrong warned the first signs of empty shelves would show up where price-sensitive imports dominate the shelf — like toys, games, and budget home goods, in addition to apparel. “These are the canaries in the coal mine of a disrupted supply chain,” he said.

Armstrong thinks toys and seasonal kids’ goods, including back-to-school items, will disappear first because of the shortened lead times and the timing of tariffs.

Fast fashion and apparel — basics, tees, leggings, socks, and some kids’ clothing — would follow. “There is often fast turnover on apparel, and thin margins mean low buffer stock,” Armstrong said.

When it comes to the agricultural sector, American farmers are getting hit from all sides. Retaliatory tariffs from China, and the European Union have strangled key exports like soybeans and almonds. Bloomberg Law reports that family farm bankruptcies increased by 55% in 2024 compared to the previous year, and are “trending even higher this year as farmers continue to grapple with depressed agricultural commodity prices and high input costs.” Trump’s additional port fees are compounding the crisis, cutting off shipping capacity just when farmers need it most.

A silver lining is that most food and agricultural products from Canada and Mexico, the US’s top trading partners, are exempt under a trade agreement negotiated by President Trump in his first term (the United States-Mexico-Canada Agreement, or USMCA). So if your diet consists of lots of fruits and vegetables, you will fare better.

Family farm bankruptcies are rising this year.

So what happens now?

Even if a deal with China were reached tomorrow, disrupted supply lines would take months to rebuild. Factories in China won't instantly flip back on and shipping schedules can't instantly be restored. So shortages are coming in the short term, not matter what.

The damage has already begun and people are feeling the pinch. A scary trend that predates the trade war is now accelerating: more Americans are turning to "buy now, pay later" (BNPL) services to afford food. And a recent Lending Tree survey shows that missed payments are climbing, with 41% of respondents saying they made a late payment on a BNPL loan in the past year, up from 34% in the year prior.

Inflation, stagnant wages, and now surging tariffs are squeezing working families harder than at any time since the pandemic-era shocks. And while the labor market remains stable for now, that stability is fragile and layoffs in certain sectors are nearly inevitable. Trucking, warehousing, and retail sectors — all heavily tied to the movement of goods — are most at risk.

A potential timeline

Apollo Global Management laid out a timeline in a presentation for clients that you can see summarized below.

Even under optimistic scenarios (who has the energy for optimism anymore?), any hope for a deal with China still wouldn't undo the immediate shock to supply chains that we will soon feel.

Here’s the key takeaway for you and your family: The slow collapse is already underway. Higher prices, scarcer goods, and supply chain disruptions won't hit everyone equally, but they'll touch nearly every American household. We should have never made ourselves this dependent on a just-in-time network that relied so heavily on so few countries. But here we are. Each of us needs to plan accordingly. And swiftly.

Readers would be wise to stock up on essentials (but DO NOT hoard), brace for repair delays and parts shortages, and tighten your budget.

We haven’t gone off the cliff yet, but the brakes are failing and the edge is getting closer.

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