Nikonomics - The Economics of Small Business

163 - Supply Chain Meltdown: Tariffs, Shortages, and the New Trade War with Craig Fuller

May 2, 2025

Craig Fuller, a serial entrepreneur and founder of Sonar and FreightWaves, dives deep into the chaotic world of supply chains. He explains how unexpected tariff hikes are causing turmoil, highlighting the lag between order and delivery that’s piling freight up. Fuller shares insights on why U.S. importers are seen as credit risks, and discusses looming shortages and potential layoffs in the trucking industry. Entrepreneurs are urged to adapt as trade dynamics shift rapidly, emphasizing the need for strategic sourcing and compliance in this unpredictable landscape.

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INSIGHT

Long Supply Chain Lag Explained

Typical US order cycles for Chinese imports span six months to a year due to manufacturing and shipping delays.
Retailers place orders months ahead, expecting products well before consumer seasons, like back-to-school or holidays.

INSIGHT

Tariffs Freeze Imports and Shipments

The unexpected 145% tariff spike makes many imports unprofitable, causing a freeze in new orders.
This leads to a dramatic slowdown in shipments and cargo piling up offshore and in warehouses.

INSIGHT

Role of Customs Brokers in Tariffs

Customs brokers arrange necessary paperwork and are responsible for collecting tariffs from importers.
Non-payment delays goods delivery, causing inventory to pile up in US warehouses.

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Join me, Nik (https://x.com/CoFoundersNik), as I interview Craig Fuller (https://x.com/freightAlley), the Bloomberg of freight and logistics. Craig is a serial entrepreneur and founder of Sonar (like the Bloomberg terminal for logistics data) and FreightWaves, keeping people up to date on the world of trade. Like many entrepreneurs, I initially thought the trade war talk wouldn't really impact me, but a tweet from Craig about back to school orders sparked my awareness about the long lag in supply chains.

In this episode, we dive deep into why the US-China tariffs, particularly the unexpected 145% increase, are causing a slow-moving car wreck in the supply chain. We break down the complex journey a product takes from a factory in China to a US shelf, explaining the roles of manufacturers, forwarders, customs brokers, ports, bonded warehouses, and domestic logistics. We discuss the significant lag between placing orders and receiving product, why Chinese manufacturers now see US importers as credit risks, and how companies are pausing all orders leading to freight piling up and a potential wave of shortages and layoffs in industries like trucking and retail.

Craig shares his insights on the data he tracks, like container outbound shipments and domestic trucking data, showing the dramatic drop in trade volume. This conversation is crucial for any entrepreneur navigating this new, unpredictable era.

Questions This Episode Answers:

- What is the typical lag time for products moving from a factory in China to a US shelf?

- Why are the high tariffs causing potential supply chain shortages and not just higher prices?

- What happens when US importers can't afford to pay the tariffs on goods arriving from China?

- What was the de minimis exemption and why did Craig call it "the most ridiculous part of our whole trade policy"?

- What can entrepreneurs do defensively and offensively right now to navigate this trade war?

Enjoy the conversation!

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This week we covered:

00:00 The New Reality of Global Trade

03:03 Supply Chain Dynamics and Challenges

05:53 Understanding the Supply Chain Process

09:11 Tariffs and Their Impact on Business

12:02 The Role of Customs Brokers and Forwarders

14:52 The Importance of Bonded Warehouses

18:08 Current Trends and Future Predictions

20:57 The Impact on Employment and Economy

23:50 Navigating the New Trade Landscape

38:46 The Impact of Tariffs on Trade

41:04 Navigating the New Trade Landscape

43:49 Understanding the De Minimis Exemption

49:15 The Challenges of Rapid Tariff Changes

54:59 Preparing for a New Era of Trade

01:01:10 Exploring Alternative Sourcing Strategies

01:06:25 The Future of Domestic Manufacturing

01:11:34 Opportunities Amidst Chaos