Tariffs Uncertainty Could Soon Lead to Empty Shelves

But the sprawling tariffs announced by the White House in recent months are primed to cause far more economic disruption than just toy shortages. With shipping ports expecting demand to go into free fall, Americans should probably begin bracing for empty shelves and higher prices in the coming months. And if the levies stick around, the U.S. could be heading down the path to a recession before the end of the year.

In fact, the economy has already begun to contract, though that might have more to do with how businesses are preparing for the tariffs than indicating a cut-and-dried drop in economic health. On Wednesday, the Commerce Department reported that real gross domestic product (GDP) decreased at an annual rate of 0.3 percent in the first quarter of 2025—the first quarter of negative growth since Q1 2022. Imports increased by more than 40 percent on an annualized basis, evidence that companies were stockpiling inventory in anticipation of upcoming trade restrictions.

To better understand the drop in GDP, it’s helpful to dive into how the statistic is calculated. GDP measures the total monetary value of domestic goods and services, adding together private consumption, business investment, government spending, and net exports—exports minus imports. Although that calculation on its face appears to subtract imports from overall GDP, they theoretically actually have “no direct impact” on the figure, as they are included in consumption and investment and then removed in net exports, in theory keeping them out of the calculation entirely. However, exports tend to be measured more precisely than imports, at least in initial GDP estimates like Wednesday’s. As The Economist notes, this could result in a later revision upward for inventories or “catch-up growth” in later quarters.

Despite the numbers making it difficult to draw broad conclusions, the clear takeaway for many economists is that businesses were gathering inventory in anticipation of the tariffs. “The reason GDP came negative was because of that import surge, which is not necessarily an actual drag on economic growth, but it just means everybody was stockpiling,” Scott Lincicome, the author of our Capitolism newsletter, told TMD. Because companies knew that importing inventory would become drastically more expensive, they bought inventory ahead of time.

“People knew that the tariffs were coming, so what they’ve done is they’ve ordered in advance,” Desmond Lachman, senior fellow at the American Enterprise Institute, told TMD. “They can probably last for a couple of months, but then you are going to see price increases.” 

Lincicome concurred. “Most companies tried to stockpile and had one to three months of inventory. If you start the clock ticking in April,” he said, “they can maybe get to June. But that’s a very rudimentary rule of thumb.” Ultimately, how long stockpiled inventories can last comes down to the specific company and product. Smaller companies—and businesses that sell perishables—will not be able to withstand the tariffs as well. And some companies haven’t been able to delay price jumps at all.

“Prices have already gone up. Perishable food items that are only available from a couple sources, those costs have either been absorbed or passed on,” Lincicome said. He noted that China-based companies like Temu and Shein that ship to customers directly have already increased prices, along with smaller Amazon third-party sellers that often source directly from China. The 145 percent tariff on products from China will be a prime driver of price increases, but non-“Liberation Day” tariffs like the aluminum and steel tariffs have impacted goods for nearly two months. For instance, there is currently a 25 percent tariff on foreign-made automobiles, though Trump moved this week to dampen some of those costs for the “short-term.”

“The way to really think about it is a build of price increases,” Lincicome said. “You’re seeing some now, and then you’ll see even more in May, and you’ll see even more in June, July. And by the time you get to the end of the summer, you’re going to be in full effect.”

One of the biggest signs of imminent economic pain came in Amazon’s short-lived conflict with the White House earlier this week. The online retail giant reportedly considered showing some customers how much of a product’s price was attributable to tariffs, drawing the ire of the Trump administration. The White House called the move a “hostile and political act,” and Trump reportedly called Amazon founder Jeff Bezos to express his frustration. Amazon now says the change was never formally approved, but the controversy signaled that companies are bracing for significant price hikes soon. “[Bezos] wouldn’t be talking about this if he didn’t think this would be happening in the next month or two,” Lachman said. The CEOs of Walmart and Target recently met with the president to warn him about coming inventory shortages—another tariff consequence. 

The Port of Los Angeles, the main entry point for goods imported from China, expects arrivals starting on May 4 to be a third lower than the year before, and bookings for standard shipping containers are down 45 percent compared to last year. Apparel and footwear will be the industries hit hardest first—more than a third of apparel and half of footwear imports in the U.S. come from China—and J.P. Morgan expects imports overall from China to decrease by 75 to 80 percent as companies decide whether to pay a tax higher than the price of the goods themselves. 

And this might not be the end of the tariffs, either. The White House’s massive “Liberation Day” levies are in the midst of a 90-day pause that will be up in early July. Whether Trump extends the pause or reimplements the tariffs is an open question, but he already reestablished tariffs on Mexico and Canada that were initially lifted for 30 days earlier this year. “I think you’d see a pretty massive selloff in the markets, and I think you’d have ripple effects throughout the economy,” Lincicome said. “At that point, you’re talking about prohibitive tariffs—and by prohibitive I mean at levels that most people just simply won’t want to import—on not just China but several other major trading partners. You’re also going to be hurting really poor developing countries that depend on the U.S. market for exports … which redounds to the rest of the global economy.”

That said, the Trump administration appears to be signaling that it is not looking to restart the higher tariffs—for now. “Some in the administration don’t want these tariffs to snap back, and they’re going to do everything in their power to prevent that via these so-called ‘deals,’” Lincicome said. But Lincicome explained that the deals are likely going to be closer to term sheets outlining certain commitments rather than fully-fledged trade deals. 

But the general environment of economic uncertainty that the Trump administration has created makes it extremely hard for businesses to plan for the future. Apple’s share prices fell yesterday after CEO Tim Cook said it will be “very difficult” to predict tariff costs—already sitting at $900 million this quarter for the tech company—after June. The uncertainty could also lead to lower investment.

“If businesses sit on their hands for several months, you’re just talking about subdued economic growth,” Lincicome said. “If investors don’t invest in real things, down the road, you have less output in the things that they were going to invest in.” Lincicome explained that there is also a growing trend of foreign investors moving out of U.S. equities, debt, and the dollar; a decrease in foreign direct investment would be a significant economic loss.

In the coming year, the uncertainty could catalyze a broader economic downturn. “The big issue is that all of this uncertainty is causing people to delay their spending, and that can produce a recession,” Lachman said. In a recent Bloomberg survey of economists, the median respondent now sees a 45 percent chance of a recession in the next 12 months.

However, if the tariffs are lifted, the economic downsides could be minimized. “If you were to reverse all of this, at worst you’d have a very shallow recession,” Lachman said. “The trouble is, [Trump] really seems to believe in this stuff.”

• In Jonathan Haidt’s After Babel Substack, Sam Pressler and Pete Davis pondered whether America is on the verge of a new, social awakening. “The moment we find ourselves in may feel unprecedented, but it follows a pattern familiar throughout American history: new technologies disrupt our communities, cultures, and constellations of meaning and, in the wake of that disruption, community renewal movements emerge to re-order, re-humanize, and re-knit our communal lives,” the pair wrote. “As Americans become more dislocated by technology, we also become more receptive to prophetic calls to rethink the good life and how society should be organized.” For example, “As more of life was shifted online (especially for the so-called ‘laptop class’), more Americans began to see the dystopian absurdity of spending so much of our time in a disembodied, disembedded digital reality.” Technology has its uses, but it is no substitute for in-person interaction and socialization. “And with that realization, small groups of Americans across the country have begun to sow the seeds of community renewal.”
• Writing in National Review, Chadwick Hagan observed that the American car market has undergone a dramatic shift in recent years. “Sedans, once a common sight on American roads, have vanished, replaced by an endless parade of oversized SUVs and crossovers,” he wrote. “What happened? It wasn’t consumer demand alone that drove this transformation. Policy played a pivotal—and ironic—role.” How did regulations inadvertently shape consumer vehicle preferences? “Under the revised Corporate Average Fuel Economy (CAFE) standards, fuel efficiency targets were tied to a vehicle’s physical footprint,” Hagan wrote. “The larger the vehicle, the easier the target became to meet. So-called light trucks—a category that miraculously expanded to include nearly anything with four wheels and a squarer back end—were given significantly lower efficiency requirements than passenger cars. As a result, automakers responded exactly as rational actors do under irrational rules: They made everything bigger. Traditional sedans were bulked up into crossovers. Ground clearance was raised, cargo space was squared off, and vehicles were quietly reclassified as trucks to game the system that Washington had so thoughtfully built for them.”

National Review: [Minnesota Gov.] Tim Walz Says Kamala Harris Chose Him for VP to Talk to White People

“I could code talk to white guys—watching football, fixing their truck, doing that, that I could put them at ease,” Walz said. “I was the permission structure to say, ‘Look, you can do this and vote for this.’”

Seth MacFarlane is best known for creating the long-running animated show Family Guy and the Ted movies. But few know that MacFarlane—famous for his raunchy comedic humor—is also a jazz musician and singer. His upcoming album features 12 never-before-heard arrangements made for Frank Sinatra, but which the legendary singer never recorded. 

Ahead of the album’s June 6 release, MacFarlane recently debuted the first single: “Lush Life.” 

Have you noticed any tariff-induced price hikes in your own shopping?