Weeks of trade ripples threaten long disruption

• And while the solution last time was "stop the virus," this time it might be even more complicated, because the problem stacks erratic policy on top of fragile supply chains.

What they're saying: "We are in a period of unprecedented disruption that's not going to stop," says Bryan Gross, principal in operations transformation at PwC.

• This period goes back to the pandemic and runs through today's global economic unrest. "I think we are surely out of equilibrium," Gross says.

The big picture: Over the last week, retail CEOs, economists and key advisers to Trump have said the U.S. is roughly two to three weeks from some shortages of goods due to an effective trade embargo with China. (Not everyone agrees the situation is that dire, yet as Gross notes, imbalances are already evident.)

• Any short-term gaps are just a preview of the long-term situation, as businesses start to cancel orders for back-to-school season, Halloween, Christmas and beyond.
• Gary Cohn, a key adviser in Trump 1.0, put the conundrum this way on CBS "Face the Nation" as he described the toy industry and its inability to absorb 145% tariffs: "They're either going out of business, or they're just going to wait and see what happens."

How it works: Commerce takes time.

• Even for companies with established business relationships, goods have to be manufactured, transported to port, loaded into a container and onto ships, cross the Pacific, dock at a U.S. port, be offloaded, transferred to a truck, driven to a distribution point, then eventually delivered to retail.
• That chain, experts say, takes multiple weeks even if everything goes well.

Between the lines: But even before then, businesses have to plan for the future, forecast demand, come up with capital, place orders, and so on.

• That's difficult to do in an environment of on-again, off-again tariffs, and a trade war between two countries that can't even publicly agree whether or not they're talking with each other.
• "It is critical to realize that just about everything that we purchase in the US in some way relies on a supply chain that starts outside of the US," Mark Malek, chief investment officer at Siebert Financial, writes in a note.
• "Hopefully those negotiations can be wrapped up quickly, because, as we learned in the pandemic, shutting down and restarting a supply takes a toll" on prices and consumers, he adds.

For the record: Treasury Secretary Scott Bessent insisted Tuesday that retailers had planned for tariff disruptions.

• "I wouldn't think that we would have supply chain shocks," he said at a White House briefing. "I think retailers have managed their inventory in front of this."

Reality check: Things can change.

• "We're still so early in the process that any type of major change could keep anything from compiling," Jason Miller, interim chair of the supply chain management department at Michigan State's Broad School of Business, tells Axios.
• But Miller says the inflection point is coming by early summer, and even if all imports don't stop, variety will decline as buyers make tough decisions about what's worth trying to sell in a higher-cost environment.
• "The shelves are not going to be as stocked as they were, that is for sure."

The intrigue: A supply shock can easily become a demand shock, with much the same complication.

• If tariffs are suddenly lifted and everyone rushes to place orders to restock their shelves, factories and supply chains will bottleneck trying to fulfill that demand.
• "You're looking at still not getting stuff for potentially months on end after that," Miller says.

The bottom line: The clock is ticking loudly.

• Port activity is declining, transportation bookings are falling, and businesses are counting the days nervously while adjusting order patterns for a future they can't really predict now.
• "We're already past the tipping point, I think is the case," Gross says.