President Donald Trump’s tariff onslaught has roiled Washington and Wall Street for nearly a month. If the trade war persists, the next upheaval will hit much closer to home.

Since the U.S. raised levies on China to 145% in early April, cargo shipments have plummeted, perhaps by as much as 60%, according to one estimate. That drastic reduction in goods from one of the largest U.S. trading partners hasn’t been felt by many Americans yet, but that’s about to change.

By the middle of May, thousands of companies — big and small — will be needing to replenish inventories. Giant retailers such as Walmart Inc. and Target Corp. told Trump in a meeting last week that shoppers are likely to see empty shelves and higher prices. Torsten Slok, Apollo Management’s chief economist, recently warned of looming “COVID-like” shortages and significant layoffs in industries spanning trucking, logistics and retail.

While Trump has shown signs in recent days that he’s willing to be flexible on the import taxes imposed on China and others, it may be too late to stop a supply shock from reverberating across the U.S. economy that could stretch all the way to Christmas.

“The clock is absolutely ticking,” said Jim Gerson, president of The Gersons Companies, an 84-year-old supplier of holiday decorations and candles to major U.S. retailers. The company, based in Olathe, Kansas, sources more than half its products from China and currently has about 250 containers waiting to be shipped.

Even when hostilities ease, restarting transpacific trade will bring additional risks. The freight industry has reduced capacity to match weaker demand. That means a surge of orders sparked by a detente between the superpowers will likely overwhelm the network, causing delays and boosting costs. A similar scenario unfolded during the pandemic when container prices quadrupled and a glut of cargo ships jammed up ports.

“There will be a surge in ports and consequently for trucks and rail creating delays and bottlenecks,” said Lars Jensen, chief executive officer of shipping consultant Vespucci Maritime.

The U.S. tariffs on China came at a critical time for the retail industry. March and April is when suppliers start ramping up inventory for the second half of the year to fill orders for back-to-school shopping and Christmas. For many firms, the first holiday goods should be hitting the water bound for the U.S. in roughly two weeks.

“We are paralyzed,” said Jay Foreman, CEO of toymaker Basic Fun in Boca Raton, Florida, which supplies big retail customers such as Amazon.com Inc. and Walmart.

Supply shock

The leading edge of that supply jolt is evident in Asia. There are currently about 40 cargo ships that recently stopped at ports in China and are now bound for the U.S., down by about 40% from early April, according to ship tracking compiled by Bloomberg.

Those vessels are carrying about 320,000 containers, according to the data, about a third fewer than just after Trump announced he was raising tariffs on almost all goods from China to 145%.

Judah Levine, head of research at cargo booking platform Freightos, said a lot of U.S. importers will be front-loading orders from other American trading partners through the 90-day reprieve on Trump’s so-called reciprocal tariffs. That could help cushion any China-centric shock through ports and logistics networks.

With Chinese merchandise too pricey, some cargo owners in the U.S. are turning to suppliers in Southeast Asia.

Hapag-Lloyd AG, the world’s fifth-largest container carrier, said in an emailed statement last week that it’s seeing cancellations of about 30% of bookings from China to the U.S. But business is sharply up from exporters in Cambodia, Thailand and Vietnam, the Hamburg, Germany-based company said.