President Donald Trump’s tariffs on goods from China have disrupted trans-Pacific supply chains. In the three weeks since the tariffs took effect, ocean-container bookings from China to the U.S. are down by more than 60%, Ryan Petersen, founder and CEO of Flexport, a global shipping company, told the Washington Post. Cargo carriers that bring Asian goods to the Port of Los Angeles, the nation’s main Pacific gateway, have canceled 20 port calls next month, more than three times as many as last month, according to port data.
The consequence will be “empty shelves in U.S. stores in a few weeks and covid-like shortages for consumers and for firms using Chinese products as intermediate goods,” Torsten Slok, chief economist for Apollo Global Management, told the Post. “Significant” layoffs in trucking, logistics and retail are likely as soon as May, Slok said.
Manufacturers that rely on Chinese imports of intermediate good to make products domestically are also showing signs of strain. The Philadelphia Fed’s manufacturing survey showed one of the biggest monthly drops on record, surpassed only by the start of the 2020 pandemic and the 2008 Great Recession.
The World Trade Organization (WTO) now forecasts that the volume of world merchandise trade will decline by 0.2% in 2025. This is a sharp reversal from earlier projections of growth and is nearly three percentage points lower than what would have been expected without recent trade tariffs.The decline is particularly steep in North America, where exports are forecast to drop by 12.6%. The WTO warns that if trade tensions worsen-such as through the reactivation of suspended tariffs or broader policy uncertainty-the contraction could deepen to as much as 1.5% globally.
I’m not really sure what it means that port calls have been cancelled. 3x as many, so a normal month would have 7 cancellations and now we have 20. Does that mean a reduction of 14 container ships?
I think there is a lot of uncertainty and fear mongering here. China is our 3rd largest partner in terms of imports. empty shelfs assumes, there are no alternative suppliers for a Chinese good. It also further assumes that the vast majority of all retail goods are only made in china. Its a change for sure, and I’m a fair trade advocate, but the evidence thus far for a trade embargo does not appear to be the end of the world for retailers, or the American consumer. I’m currently in Japan as I type this and see that there are plent of goods here that could be a good substitute for Chinese made goods, given some ramp up. Japan at least has been more willing to work with the US and could use the growth.