Expect to See Empty Shelves in Two Weeks

With cargo shipments off as much as 60 percent, the supply shock is likely to deliver higher prices and Covid-like shortages.

Good Morning!

Here are today’s highlights:

• Gene Marks talks about a QuickBooks special offer, the return of Microsoft's Recall AI, and how to create your own AI assistant.

• Do you know what it’s called when people and companies stop spending money?

• Because of tariffs and reduced demand, even U.S. manufacturers are reluctant to expand production right now.

• Not so long ago, the Sharks wouldn’t back a manufacturer who refused to move production overseas.

RETAIL

The supply shock will produce empty shelves by mid-May: “Since the U.S. raised levies on China to 145 percent in early April, cargo shipments have plummeted, perhaps by as much as 60 percent, 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 and Target 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.”

• “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.”

• “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 US 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 and Walmart. He called the tariffs a ‘de facto embargo’ and said customers have been pausing orders so far, but he expects them to start canceling them if the China tariffs stay at this level for much longer.” READ MORE

THE 21 HATS PODCAST: DASHBOARD

A Tech Update for Small Business Owners: This week, Gene Marks highlights some recent tech developments: QuickBooks is selling a lifetime version of its software for just $250. Microsoft has reintroduced its somewhat controversial Recall AI tool, which captures and indexes screenshots of user activity every three seconds—a function that is intended to improve cybersecurity but that has raised some interesting questions. And Gene explains how—if you have the time and money—you can now connect the various software platforms you use and turn them into an AI assistant.

• You can subscribe to the 21 Hats Podcast wherever you get podcasts.