I had this issue too and reached out to the Sqaurespace chat.
They told me to un-sync.
And then re-sync.
And that seemed to do the trick for me.
The one thing I can't solve is that some of my deleted items keep reappearing in my Merch panel in Squarespace every time the page reloads.
So Squarespace is looking into it further and will get back to me.