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canyonwalkerYesterday I wrote about people anticipating shortages due to the new tariff regime. The focus some of my friends were putting on it was food shortages/price spikes. I get that as thing to focus on; food is a necessity. But because it's a necessity it's demand inelastic, so while I expect there will be price increases I don't expect there will be bare shelves in stores as producers shut down and supply chains grind to a halt.
I believe some supply chains will grind to a halt; it just won't be in food. Or at least it won't be widespread in food. I think it will be widespread in consumer electronics— much of which does come from China nowadays, but also Japan, Taiwan, and Thailand, too. In fact I believe the start of the supply chain shutdown is already appearing. When I visited Costco over the weekend I browsed their computers and peripherals department and found it greatly downsized.
What's visible today is just the start of something bigger. It takes a while because of the realities of international supply chains. It takes about 3 weeks to ship electronics from Asia to the western US via container ships. Producers and shippers plan their loads in advance. Already US ports like Long Beach estimate a 25% drop y/y in container traffic in May. Once deliveries at ports dry up, all that's left is what's already in the channel stateside, and that's not a huge supply anymore. So I believe the shelves at electronics retails are going to shrink a lot more in the next few weeks.
This isn't news, of course. A lot of people started anticipating higher prices in electronics from the start of the tariff trade war four weeks ago. If you think you need new electronics, a few weeks ago was probably the right time to buy. If you didn't do it then, now might be the last chance before price increases really bite. Major manufacturers like Sony are already announcing that there will be price increases.
I believe some supply chains will grind to a halt; it just won't be in food. Or at least it won't be widespread in food. I think it will be widespread in consumer electronics— much of which does come from China nowadays, but also Japan, Taiwan, and Thailand, too. In fact I believe the start of the supply chain shutdown is already appearing. When I visited Costco over the weekend I browsed their computers and peripherals department and found it greatly downsized.
What's visible today is just the start of something bigger. It takes a while because of the realities of international supply chains. It takes about 3 weeks to ship electronics from Asia to the western US via container ships. Producers and shippers plan their loads in advance. Already US ports like Long Beach estimate a 25% drop y/y in container traffic in May. Once deliveries at ports dry up, all that's left is what's already in the channel stateside, and that's not a huge supply anymore. So I believe the shelves at electronics retails are going to shrink a lot more in the next few weeks.
This isn't news, of course. A lot of people started anticipating higher prices in electronics from the start of the tariff trade war four weeks ago. If you think you need new electronics, a few weeks ago was probably the right time to buy. If you didn't do it then, now might be the last chance before price increases really bite. Major manufacturers like Sony are already announcing that there will be price increases.
