1 day Ago By USA TODAY
December is more than half a year away, but President Donald Trump just acknowledged that it could be tighter for families this holiday season. "Somebody said, 'Oh, the shelves are gonna be open,'" Trump told reporters Wednesday. "Well, maybe the children will have two dolls instead of 30 dolls, and maybe the two dolls will cost a couple of bucks more.
" But what does that actually mean? Economists worry Trump’s sweeping tariffs will drive up prices and lead to shortages — two things that could make buying gifts and preparing for the holidays more difficult. Reaction to Trump’s on-again off-again tariffs have rocked the stock market , consumer confidence , and GDP , but their impact on the costs and availability of goods has yet to be fully felt. On Wednesday, Trump appeared to acknowledge the tariffs will force consumers to cut back.
Trump announced tariffs on goods imported from most countries on April 2 . Although he later announced a 90-day pause on some of them, orders on imports to the U.S.
have declined, according to James Knightley, chief international economist at Dutch bank ING. An April report released by Apollo Global Management lays out a timeline explaining when consumers could begin to feel the tariffs' effects. The report estimates it takes 20 to 40 days for a containership to reach U.
S. ports and one to 10 days for goods to travel to cities. It predicts by the middle of May, containerships to U.
S. ports will come to a stop and by late May, consumers will start to see “empty shelves.” But will shelves really be vacant and how expensive will products be? Here’s what we know now: More: Is America's economic slip temporary? Trump, Biden allies divided over GDP report 'Pandemic-like shortages' if nothing changes Whether U.
S. consumers will face shortages depends largely on what happens over the next few weeks. Trump said the 145% tariff on goods imported from China will eventually “come down substantially” and his administration says it is negotiating with dozens of other countries over tariffs.
Robert Handfield, professor of supply chain management at North Carolina State University, doesn’t think we will see empty shelves for a month or two. But issues could arise if Trump doesn’t pivot soon. “Shortages aren’t imminent, but we could see some in the months ahead,” Knightley said.
Major retailers including representatives from Walmart and Target met with Trump on April 21 to discuss how tariffs would affect their imports. “There has been reporting that the leadership of those companies told the president that by mid-May they would be running out of inventory and Americans would need to prepare for pandemic-like shortages if policy did not adjust,” said Michael O’Rourke, chief market strategist at JonesTrading. O’Rourke said that appeared to be a reason why Trump said he might act to lower tariffs on goods imported from China shortly after the meeting.
Steve Blitz, chief U.S. economist at GlobalData, said in an investor note that “the empty cupboards tale is simply nonsense.
” He said sellers make money by turning their inventory into cash, and called businesses deciding to hold no inventory “business malpractice.” Handfield said Walmart and Target took in “a lot” of advance shipments when they saw the tariffs coming. “Their warehouses are full of product because they planned ahead,” Handfield said.
“When they’re depleting inventory and need to restock, that’s where problems are, potentially.” Will prices go up? Trump’s comments Wednesday addressed the toy industry, which could be one of the hardest hit by tariffs. As much as 75% of toys sold in the U.
S. are imported from China, according to data from the U.S.
Commerce Department . But Handfield says “just about everything” will be affected. “Shoes, apparel, toys,” Handfield said.
“Kitchen appliances and knick knacks, baskets, storage, almost everything’s made in China.” Without a pivot in trade policy, Knightley said people are likely to start noticing price hikes when it’s time for back-to-school or Black Friday shopping. Some prices have already increased .
In the three weeks following Trump’s April 2 announcement, Amazon prices rose 4.2% on 50 products, according to a sample conducted by MoffettNathanson Research, an equity research firm. Prices on the same products at Walmart and Wayfair had risen 2% and 1.
3%, respectively. O’Rourke noted that the major retailors’ meeting with the president came only a few weeks after Walmart executives said the company remained confident about its business strategy despite the new tariff environment. Walmart Chief Financial Officer John Rainey reminded investors on April 9 that more than two-thirds of what it sells is made in the U.
S. “CEOs will paint a bleak picture for the president, but it is not a great look to tell your investors a notably different story at roughly the same time,” O’Rourke said. For those who were hoping to get a jump on holiday gifts by shopping on Amazon Prime Day in mid-July, tariffs are also causing some sellers to rethink their participation.
Reuters reported some third-party sellers who previously offered goods made in China during the premier online shopping day are considering reducing the amount of discounted merchandise they’ll offer this year or sitting out the event entirely. Contributing: Medora Lee and Andrea Riquier Reach Rachel Barber at [email protected] and follow her on X @rachelbarber_ This article originally appeared on USA TODAY: Will tariffs cause shortages and high prices?.
