| DAILY ISSUE Tom Yeung here with today’s Smart Money. In February 2020, photos began circulating of deserted locations in China. Empty subway stations… Desolate malls… There was not a soul to be seen in downtown Beijing, Hong Kong, or Shanghai, as the picture below shows.  Source
A month later, American pandemic lockdowns began. Today, similar images of desolation are coming toward our shores. But instead of empty subway stations and malls, it’s store shelves that will be barren…  Source
That’s because America is quietly running out of Chinese goods. On Wednesday, the National Bureau of Statistics revealed that Chinese export orders for April had plunged to their lowest level since the Covid-19 pandemic. Container ship arrivals to the Port of Los Angeles are scheduled to decrease 36% later this month. And retailers will eventually burn through the pre-tariff stockpiles they’ve hoarded. So, in today’s Smart Money, let’s take a look at what the continued trade war with China means for us as consumers... and, importantly, as investors. I’ll also share the date that could spark massive market panic. It’s a lot sooner than you might think. | Recommended Link | | | | A Wall Street veteran with a four-decade track record has issued a disturbing warning from his estate near Mar-a-Lago. He warns of an economic restructuring that will eliminate traditional career paths while creating unprecedented wealth opportunities. This message cannot be silenced. |  | | The Trade War's Impact Over the next several months, retailers will run out of cheaply imported inventory. Products we take for granted will disappear, and many unexpected items will suddenly become far harder to find. The first to vanish will be toys and seasonal kids’ goods, given their relatively quick turnover and reliance on Chinese manufacturers. We could see this impact as soon as next month. The next will be fast fashion and low-cost home goods. Then, apparel… footwear… electronic components… household appliances… and so on. Each new month will bring another knife twist to American supply chains, simply because no other country (not even the U.S.) can replace the manufacturing capacity of China on such short notice. Of course, I’m only talking hypothetically. That’s because President Donald Trump still seems to care about public opinion and stock prices. He backed off full “Liberation Day” tariffs after a major Wall Street selloff, and will almost certainly lighten up on Chinese tariffs once retail panic begins. After all, the president did not win the race to the White House by promising empty store shelves. However, that still means a retail panic must first happen. Over the past decade, we’ve gotten a good look at how our president operates. He loves to make grand deals. He loves to negotiate. And he loves to look strong to his constituents. And that’s worrying because Trump is clashing swords with a leader who also wants to appear strong to his own people. That means it’s extremely unlikely we’ll see a sudden “grand deal” with China to bring all tariffs to the 25% to 30% range – the sweet spot where taxes are high enough to incentivize re-shoring, and low enough to keep trade moving. Neither side wants to look weak. Instead, the next several months will likely see a second dip before both sides come to the table. Even then, we may only see a hodgepodge of tariff cuts, leaving importers without the confidence to make big orders or rebuild supply chains outside China. That will eventually lead to low inventories, less consumption, and a “W-shaped” recovery. So, how should investors prepare for an upcoming “everything shortage”? Two Steps to Arm for a Trade War First, you must check your portfolio for China-dependent companies and reduce exposure where you can. For instance, with... - Retailers. Firms like Amazon.com Inc. (AMZN) and Target Corp. (TGT) import anywhere from 30% to 70% of their total inventory from China. Raising prices to offset tariffs could prove ruinous for their reputations, so they have no choice but to eat the costs and accept lower (or negative) profits.
- Apparel. Many clothing sellers have surprisingly concentrated supply chains. UGG owner Decker Outdoors Corp. (DECK), for example, sources its entire sheepskin inventory from two Chinese tanneries.
The next step will be to protect yourself from the second dip of a “W-shaped” recovery. President Trump will likely delay reducing tariffs until something goes wrong, so we'll probably see a pullback as retail panic sets in. That means cutting back on the riskiest of risky bets like short-dated call options... zero-profit startups... even major cryptocurrencies. But after that, you need to prepare for a recovery through buying the high-quality winners we’ve long talked about in this newsletter. And the good news is the second leg of the "W-shaped" recovery could happen as soon as next Wednesday, May 7. According to my InvestorPlace colleague Luke Lango, a big event that day could trigger a flood of cash – roughly $7 trillion – to rush back into U.S. stocks. This catalyst could change the entire market and create a summer "panic" like we've not seen since 1997. This is why he is holding a special 2025 Summer Panic Summittonight at 7 p.m. Eastern. At this event, Luke will explain why he believes this catalyst on May 7 will be a game-changer. Plus, he'll share a new set of stocks that he believes are primed to lead the next wave of growth. The event starts in just a few hours, so click here now to automatically reserve your spot for the 2025 Summer Panic Summit before it begins. You won’t want to miss what Luke has to say. Until next week, Tom Yeung Markets Analyst, InvestorPlace | 
