Empty Shelves: The New Front Line in the US-China Trade War 

Empty shelves are the most visible sign that supply chains have failed. During the early days of Covid-19, grocery stores were briefly cleared of items like toilet paper, face masks, pasta, and canned vegetables as supply chains adjusted to mass panic-buying and unprecedented global disruption.  
 
Today, thanks to President Donald Trump’s 145% tariffs on Chinese imports and an escalating trade war with the world’s second biggest economy, the prospect of American consumers once again browsing bare aisles is back in the news. 
 
Last week, the CEOs of major US retailers were in Washington to warn Trump that price increases aren’t likely to be the only consequence of his chaotic tariffs policy. Toys, footwear, budget apparel, and a vast array of homeware, from washing machines to ice-cream makers, are among China-dependent goods that could be hit first. 

Red Flags All Round

It isn’t only American shoppers and Chinese factory owners who will be bereft. Empty shelves are anathema to supply chain leaders driven by a KPI regime of on-time, in-full (OTIF) delivery and perfect order fulfilment.  

Among the 16 COOs, CSCOs, and senior supply chain executives who joined Zero100’s latest tariffs roundtable last Thursday, several flagged empty shelves as a major concern. The CSCO of one large US consumer goods company told his peers at the virtual event, held under the Chatham House Rule, that “the worst outcome is no products on the shelf.” Ensuring that this doesn’t happen is the “North Star” for his entire organization. 

Another CSCO said he pictured “supply chains shut down for six weeks” and “Covid-style craziness” in the form of product shortages for several months once they reopened.  

Shipping data points to a surge in US imports from China ahead of Trump’s Liberation Day tariffs announcement, with ocean container volumes in March up 9.4% YoY. However, bookings in the three weeks since April 2 dropped by over 60%, according to logistics platform Flexport. 

Even if US-China trade negotiations take place soon and lead to significantly reduced tariff levels, shipments of paused or cancelled orders from Chinese suppliers will take weeks to reach US ports. 
 
Gene Seroka, Executive Director of the Port of Los Angeles, predicts that from next week, “arrivals will drop by 35% as essentially all shipments out of China for major retailers and manufacturers have ceased.” Some 40% of LA’s import traffic is from China, while at the neighboring Port of Long Beach, it’s more than 60%.  

Knock-On Effects

Aside from empty shelves, supply chain and operations leaders expect disruption from the US-China trade war to increase inventory buffers, lead to supplier bankruptcies, and delay component availability, according to Zero100’s second rapid pulse survey among CSCOs and COOs last week.

While more than two-thirds of those polled said they had not experienced any major disruptions so far, they are moving ahead with plans to cut their dependence on China-based supply chains. Almost half said they would reconfigure more than 25% of their sourcing and manufacturing activities in the country over the next three years. For 31%, this would include the majority of their operations in China. 
 
From a financial perspective, three-quarters of CSCOs expect their costs to rise by up to 10% during the remainder of 2025. And 69% say these extra costs will be passed on to customers in the form of price rises over the next 12 months – adding to fears of inflation among central bankers, policy makers, and business leaders.

Keep Calm and Carry On

Despite a gloomy economic outlook and a blizzard of media scare stories, it was evident from our roundtable that supply chain leaders are taking a measured approach to tariff uncertainty and trade flow volatility. A few of their sentiments: 

• “Be prepared and have back-up plans,” in the form of dual sourcing and six months’ inventory, was the answer for a leader at one large US equipment maker.  
• “Keep cool, we will deliver no matter what,” suggested an industrial sector CSCO. And remember that “every crisis is an opportunity” – underutilized capacity somewhere in the world, for example, just waiting to be snapped up at an advantageous rate. 
• “Be pragmatic and manage the situation for what it is,” even if it takes four years to settle down, advised the consumer products CSCO. 

Just don’t let that OTIF metric slide too far.