Shoes, Toys, Apparel And Earbuds May Disappear From Shelves First As US-China Trade War Disrupts Supply Chains, Retail Experts Warn

The U.S. retail sector is facing potential shortages in key consumer product areas as the ongoing trade war with China leads to a decrease in manufacturing orders and freight bookings, pushing the national supply chain towards a critical point.

What Happened: The U.S. supply chain is nearing a tipping point due to a decline in manufacturing orders and freight vessel bookings from China. Apparel and footwear, sectors heavily dependent on Chinese imports, are particularly at risk. In 2024, China accounted for 37% of all U.S. apparel imports and 58% of all U.S. footwear imports. The sudden implementation of tariffs left companies with little time to adjust their sourcing strategies, reported CNBC.

Companies are bracing for a range of impacts, including price increases and wary consumers. Orders for high-value items have spiked in anticipation of price hikes. Supply chain experts predict that lower-end stores, which rely on low-cost imports, will feel the effects of the tariffs most acutely, especially if they maintain lean inventory levels.

Supply chain expert Casey Armstrong predicts the first signs of empty shelves in areas dominated by price-sensitive imports, such as toys, games, back-to-school items, budget home goods, and apparel. He also expects shortages in fast fashion and apparel items, low-cost home goods, and consumer electronics supply like phones, earbuds.

"These are the canaries in the coal mine of a disrupted supply chain," Armstrong told CNBC.

Meanwhile, Jonathan Gold from the National Retail Federation stated, "The uncertainty around the tariffs is challenging for businesses, especially for small businesses that are currently preparing for critical winter holiday orders."

Why It Matters: The potential retail shortages come in the wake of President Donald Trump‘s softened stance on his trade war with China, following warnings from top retailers about the risk of empty shelves. Earlier this week, CEOs of major retailers like Walmart WMT, Target TGT, and Home Depot HD met with Trump and warned him of the tightening supply lines due to his trade policies.

Earlier in April, Trump’s decision to end de minimis exemptions had already put e-commerce platforms such as Shopify Inc. SHOP, Bigcommerce Holdings Inc. BIGC, and Lightspeed Commerce Inc. LSPD under pressure, making them ‘most exposed’ to the ongoing trade tensions.

The looming retail shortages underline the far-reaching impacts of the U.S.-China trade war, affecting not just manufacturing and merchandise but also software and service providers.

SPDR S&P Retail ETF XRT declined nearly 3% over the past month while VanEck Retail ETF RTH edged 0.8% lower, according to data from Benzinga Pro.