Brands, Retailers Face Sourcing Paralysis As Inventory Dwindles
Kate Nishimura
8 min read
Despite the 90-day pause on President Donald Trump’s “reciprocal” tariff scheme, the impacts of the duties are likely to be felt at retail much sooner.
It will be weeks, not months, before consumers start to see dwindling inventory—sparse racks, spotty shelves—at their favorite stores, according to many experts.
And that’s only the beginning. Because amid the uncertainty, retailers are pushing out decision-making about back-to-school and the fall and winter holidays—choices and commitments that would normally be taking shape now.
Instead, brands and retailers are in a holding pattern and attempting to avoid solidifying their sourcing and inventory strategies for as long as possible, according to Julia K. Hughes, president of the U.S. Fashion Industry Association (USFIA).
“Everyone hopes to get some insights about what the Trump trade deals will look like,” she explained. “Aside from China, the question is whether the 10-percent tariffs stay in place or [whether] the big ‘reciprocal tariffs’ return on July 9. It’s difficult to sign contracts when no one knows what the costs will be.”
In the case of China, which faces 145-percent duties on U.S. imports, the tariffs are essentially an embargo, she said. That’s a problem because for fashion brands, there aren’t a lot of options for sourcing certain products, and there’s not enough time to switch to new markets, especially with reciprocal duties looming. “Sweaters are a great example where China is the major manufacturer of all types of sweaters—cotton, wool and man-made fiber,” Hughes said. The prohibitive cost of importing them will inevitably lead to a smaller selection at retail.
As confusion persists, “Small business owners are canceling orders and will be the first to be affected,” she added. “For larger companies, no question that the uncertainty is hurting everyone’s ability to plan. They are ready to raise prices, and they are working with key suppliers on business plans, but I get the sense that they are postponing a lot of decisions until there is some clarity about what comes next.”
A Retail Industry Leaders Association (RILA) source familiar with planning said inventory strategy is going to vary company by company, even by retail vertical.
The trade group’s members include retail stalwarts like Dick’s Sporting Goods, Dillard’s, Macy’s, Nordstrom, Dollar General, Kohl’s, Target and REI. In speaking with members, the planning expert said many did front-load inventory earlier in the year, but the availability of products could shift nonetheless.
A significant contingent of retailers has paused purchase orders from China, and some are holding already-produced shipments overseas as they wait and see whether the duty rate on Chinese imports will be remediated to something they can endure. Members are also assessing the current trade environment to see whether they can move sourcing for certain products—or whether they might find a more favorable market to sell products they’ve already purchased.
According to Blake Harden, RILA vice president of international trade, there’s a lot of focus on the triple-digit China tariffs, and those are certainly the most pressing and imposing concern for retailers and brands that produce in the country. “But we have a 90-day pause on other countries, and there’s still a tremendous amount of uncertainty about what happens July 9,” she said. “Many of our members have done incredible work over the last eight years to diversify out of China, and now they’re really worried that they’re going to get hit with tariffs in those places.”
RILA members that brought in more inventory than usual earlier this year may be able to float themselves through this selling season, but there is concern about back-to-school, Halloween and the holidays.
“We are in a critical window for companies, where they’re trying to make decisions. For some it’s this week, next week—there’s some variability in how fast this needs to happen,” she added, “but the President really needs to get China to the table, or find a path to a deal.”
Trade groups have a direct line to retailers and their concerns, but there could be some firms that are holding their cards close to the chest as not to spook shoppers or investors. The data on import volumes doesn’t lie, though.
Last week, the SoCal Ports of Los Angeles and Long Beach said they expect to see imports fall by 35 percent and 38 percent respectively for the week of May 4-10. Located in the San Pedro Bay complex, the twin ports process 40 percent of the country’s imports. They said they expect 59 blank sailings between May 1 and June 30.
Port of Long Beach executive director Mario Cordero said last week that even with the frontloaded orders, most shippers are “only stocked up for the next six-to-eight weeks,” and that inventory is “going to be depleting in a very short time.”
These figures paint a stark picture for retail, according to Kyle Beaulieu, senior director and head of Flexport’s ocean business for the Americas.
“The range of volume decrease from China has been 30 to 50 percent since the tariffs were announced. That’s already begun in terms of what’s on the water. And in response to that, carriers have implemented a bunch of blank sailings, when you remove a vessel from a network,” he said.
Flexport’s most recent insights indicate that Ocean Alliance (CMA CGM, COSCO, Evergreen, and Orient Overseas Container Liner), Premier Alliance (ONE, HMM, YML), and ZIM/MSC have completely suspended 10 of their weekly service loops—and more services are “blanked” for several weeks across alliances and carriers.
More announcements of a similar nature are expected; in late April and early May (Weeks 17-19), over 25 percent of weekly service-loops have already been axed. That surpasses the same period during the Covid-19 pandemic in 2022, which saw a 24-percent cancellation rate.
“What’s more unprecedented is that they’ve just straight up suspended some services; the latest count is that eight services have been either postponed or suspended, the shortest being suspension for about four weeks—and some of them have been suspended indefinitely,” Beaulieu said.
That’s a concerning development given that May through late summer are typically the year’s busiest shipping periods. But with brands in a holding pattern when it comes to orders, “Carriers are responding,” he added. “They are also downsizing some vessels, moving some larger ships to other trades.”
According to Beaulieu, the Ports of L.A. and Long Beach are seeing the impacts of decreased shipping volume soonest, given that they see the fastest transit times from Asia. Companies importing goods through the West Coast gateways will also feel the effects on their inventory levels. “It will vary based on both your product and [which port] you’re coming into, but we could start seeing some impact of this on the shelves in the early summer,” he said.
Asked whether brands are, or will begin, shifting production to countries with lower U.S. tariff rates, the Flexport lead said, “I think it’s a big, open question. There is a paralysis for a lot of client companies about what to do.”
It’s too late to move production to a new locale and have it shipped into the U.S. before the July 9 expiration of Trump’s reciprocal tariff deferrals. And the lack of clarity from the administration about trade policy and relationships with trading partners has companies drawing down on shipments when they should be ramping up for peak season.
That uncharacteristic inertia will create reverberations throughout the remainder of 2025, Bealieu believes.
“We do expect it to be a chaotic situation; to be pretty volatile. The uncertainty has meant that everyone has to respond based on their bottom line, and so they’re not necessarily placing orders in the same time frame that they might be otherwise,” he said. Flexport has seen a range of reactions from its clients, from halting production altogether to holding cargo offshore as they wait hopefully for a development from the White House.
“In some cases these products are sitting in the warehouses, and so they’re paying for the storage. Every company will have their negotiations with their supplier over what the terms of that might be,” he added. “A lot of manufacturers don’t have extra storage space, so there are limits to how much you can produce and hold.”
Some companies that do business globally are also looking into selling it in other markets, like Europe—a tactic Beaulieu said he believes will really start to take hold the longer the tariff uncertainty lasts.
But for many, the only course of action at the present moment is inaction. Waiting and fretting.
“They’re extremely worried,” Beaulieu said. “All of them have to plan for these variables and try to make the best decisions that they can for their company. They can’t continue with the same plans that they had going back to January.”
