Scarcity, Affordability and Liquidity in 2025 America. "Trade will flow but at greater complexity." "Top 10 Foods vanishing from shelves due to tariffs"
- TC
- Apr 22
- 8 min read
Updated: Apr 26
New Video unfortunately echoing observations made below.
In December, 2024 there was chatter comparing the upcoming 2025 supply chain environment to that of 2019 BUDGET-2019-PER.pdf mainly due to climate volatility and foreign policy. Today, the 2025 supply chain and commodity markets are indeed reminiscent of 2019 with troubling signals pointing to further disruptions. One difference; in 2020 the world generally banded together to help fight the pandemic, today's 2025 turmoil is being provoked by U.S. trade wars, overt hostility and conquest.
U.S. policy has become impossible to predict and a direct consequence of this shift is the widespread disruption of the food and ingredient supply chain. The first indication that this administration was planning to destroy the status quo was the USDA ERS purge www.huffpost.com/entry/donald-trump-usda-kansas-city_n_67993740e4b0032f678f7505 which will strain USDA data dissemination, surveys, statistics and research. Further cuts to USDA are expected. Less data combined with policy chaos will make strategic planning more difficult let alone logistics, R&D and innovation. We are receiving signals from the supply chain in real time from SNF 3PL partners confirming the complexity of the crisis:
Customs Brokers representing importers are doing their best to bridge the communication and transaction process with exporters. These parties rely on U.S. Customs (online platform) to pay standard shipping and importation fees (U.S. Customs clearance). U.S. Customs responsibility is to post and enforce the U.S. rules for international commerce (in this case, IMPORTS). Today, all parties are seeking guidance and answers to the many import transaction details that are changing daily:
Is there an Import duty: Yes ? < Or No? < If yes, how much % per product?, If yes, what is the $ variance from each product (some are assembled in several nations). What % rates are applied when including industry carve-outs, country carve-outs and company carve-outs?
Free Trade Agreement (FTA's) are wildly complex. Today, FTA's are being simultaneously negotiated with +75 countries, and the situation is now a quagmire with global implications. The NAFTA FTA 2.0 refresh (USMCA) took 20 months to hash out and the original NAFTA FTA took several years to sign. Timeline: How a new North American trade deal happened | Supply Chain Dive
April 14, 2025
April 16, 2025
April 21, 2025
The current policy liberating the nation FROM free trade has caused a supply chain cardiac arrest whose shockwaves are starting to cause pockets of scarcity, affordability and liquidity issues. The U.S. economy seems to be morphing into a Soviet style system of uneven rules, mandates, and continuous change reflecting political and ideological priorities.
From the supply chain front lines, retailers are cancelling or delaying orders, manufacturers are delaying shipments, delaying new purchases and making difficult decisions to conserve cash. The panic has subsided but the fear lingers. The 90 day reprieve for across the board tariffs has calmed the panic (reflected in equity markets) and many corporates are choosing to pause new orders (shell-shock), conserve inventory and try to wait out the trade war stand-off until the all-clear signal is given. To appreciate the problems that public companies are enduring, Morningstar built the following tariff exposure basket:
*This analysis was originally published by Morningstar Equity Research.
This has the potential to turn into a more serious liquidity issue which could manifest in massive price increases and scarcity. The situation is critical as we ask the following uncomfortable question:
What if the trade war persists and the import duty knots are not resolved?
Bailouts for farmers are already being mentioned to subsidize the sales gap caused by disrupting three sales channels in the first 100 days of the administration. Farmers are having a hard time finding new markets for their crops after three sales channels were decimated:
1) U.S. Government crop and food purchases via USAID / USDA / CCC / SNAP and Feeding America programs. Food banks feel the pain from higher prices and cuts to government programs | PBS News
2) Private / Public downsizing and layoffs effecting consumer demand / commercial disappearance. Spending Pullback May Worsen as Job Openings Decline
3) Agriculture exports to China have stopped.
Unless tariffs are cancelled across the board and soon, food manufacturers will be forced to consider shutting down (automotive has already started closing ops) or choose to continue operating, paying import duties, payroll, and praying that goods sell at Cost + Duty + Margin. Incredibly, neither the administration nor Congress appear to understand the mechanics nor the implications of across-the-board - import duties. The U.S. "Just-In-Time" supply chain is not prepared to withstand massive duties (price increases), extended delays AND uncertain sales projections at new import duty induced sales prices. Q1 economic indicators were already weak. Elevated interest rates have driven the supply chain to also manage less inventory buffers. A revealing vignette from May 1, 2024 about whether 10% across-the-board tariffs were a good idea, remains in contrast to what is transpiring today;
Cortellessa: When you say more than that, though: You mean maybe more than 10% (duty) on all imports?
Trump: More than 10%, yeah. I call it a ring around the country. We have a ring around the country. A reciprocal tax also, in addition to what we said. And if we do that, the numbers are staggering. I don’t believe it will have much of an effect because they’re making so much money off of us. I also don’t believe that the costs will go up that much. And a lot of people say, “Oh, that’s gonna be a tax on us.” I don’t believe that. I think it’s a tax on the country that’s doing it. And I know.
April 22, 2025
New price hikes are slowly being passed along the value chain to consumers, and "pre-tariff" consumer deals are growing in popularity. Importers are still hesitant to forward-purchase raw materials or finished goods at unknown import duty prices. Forward demand estimates are always a guessing game. If purchasing departments, risk managers and supply planners miss the prediction mark (demand or pricing by +/- 30%) they can all lose their jobs. Speculation and market manipulation is growing.
U.S. Food Safety and Agriculture as a whole may start to show signs of stress.
"Bloomberg Law’s Alex Wolf and Skye Witley reported that “family farm bankruptcies increased by 55% last year compared to 2023 and are trending even higher this year as farmers continue to grapple with depressed agricultural commodity prices and high input costs.”
April 22, 2025
April 22, 2025
April 23, 2025
Trends and patterns:
China:
U.S. belligerence towards American friends and allies; Canada, Greenland, Denmark, the EU, Mexico and Panama has now been aimed at China. It's safe to assume that China was insulted and possibly humiliated by the current administration. Some things can't be unsaid and in response to last week's "peasant insult", Chinese Commerce Ministry issued a strong statement: "The U.S. threat to escalate tariffs on China is a mistake on top of a mistake and once again exposes the blackmailing nature of the U.S. China will never accept this." The country further asserted its position: "If the U.S. insists on its own way, China will fight to the end."
To insult and humiliate anyone is in bad taste and unwise. To do this to our friends and trading partners makes no sense. To insult and humiliate the Chinese is a historically grave error. Chinese history and in particular the relevant importance of the "Century of Humiliation"(1839-1943) makes this moment particularly perilous. The national disgrace and collective trauma provoked by the Opium Wars have imprinted into modern Chinese culture one of the most significant lessons from China history;
落后就要挨打
"The backward will be beaten"
The saying; "The backward will be beaten" is a saying that attributes the nation’s 'Century of Humiliation' experiences to economic, military, and technological backwardness, and has been the driving force to modernize China to prevent being taken advantage of ever again from any adversary. This slogan was established after the cultural revolution, and remains a powerful tool of memory politics and is required to be remembered in China to this day.
According to Yi Wang who authored: "The Backward Will Be Beaten’: Historical Lesson, Security, and Nationalism in China", he states:
"The institutionalized production of ‘the backward will be beaten’ is mainly located in historical commemorations and history education. Historical commemorations, mainly about war and revolution in modern Chinese history, have been one of the bourgeoning activities used by the Chinese state to promote patriotism, and ‘the backward will be beaten’ has become a part of the habitual narration in them. In the People’s Daily, many articles written for historical commemorations, particularly war commemorations, mention ‘the backward will be beaten,’ such as during the anniversaries of the Opium War, the Eight-Power Alliance Invasion, the Manchurian Incident, the First Sino-Japanese War, and the War of Resistance against Japan. The standard ‘templates’ used to narrate the past in war commemorations often begin with the stories of the humiliation history, then tell audiences the historical lesson of ‘the backward will be beaten,’ and promote patriotic slogans and visions including self-strengthening, national development, and national security."
Trends and patterns:
Russia
Russia continues to have success promoting perceived synergies to the current administration re: mining, energy, shipping, and food sectors. Future two-way trade appears imminent and not without precedent as Reagan famously emptied CCC dairy stocks to the Soviet Union over one summer.
March 25, 2025
April 11, 2025
April 18, 2025
Moscow seizes privately owned U.S. food manufacturing asset in Russia.
Shrewd bargaining chip for upcoming negotiations.