Long government shutdown could slow supply chains
Potential backlogs and reduced freight demand may ease inflation risks despite sectoral tariff pressures
Our supply-chain stress index moderated in August, as front-loading activity subsided.
A prolonged government shutdown could cause backlogs for supply chains, especially if there is a rise in absenteeism at agencies responsible for cargo inspection. Odds are the shutdown would need to persist for several weeks before impacts are felt.
An early peak shipping season has resulted in diminished shipping demand in the second half of 2025. An excess supply of freight carriers will keep downward pressure on freight rates in the near term. This limits the risk that supply-chain stress is inflationary.
Looming sectoral tariffs risk whipsawing supply chains in the semiconductor and pharmaceutical industries.
