U.S. trade is already falling amid dire warnings
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Merchandise trade between China and the U.S. is likely to collapse if the current tariffs on both sides remain in place.
- How much of that collapse has already started, however, is unclear.
The big picture: While some transpacific container-shipping routes have been canceled or changed to avoid U.S. ports, many ships are still headed for Long Beach, Oakland, and other U.S. destinations.
- They can still decide not to dock in the U.S. if the tariffs remain in place.
Driving the news: The U.S. and China have effectively put trade embargoes on each other, Treasury Secretary Scott Bessent reportedly said on Tuesday, echoing a forecast from the World Trade Organization that merchandise trade between the two countries "could decrease by as much as 80%."
- President Trump said late Tuesday he won't play hardball with China and a deal will be made, but when and with what impact remains to be seen.
Where it stands: While activity at U.S. ports is declining, it's still broadly within a normal range.
- There are 22 vessels scheduled to enter the Port of Los Angeles this week, with 18 set to enter next week and just 12 the week after, according to the port's Signal database.
- In terms of the number of containers, the forecast for the week of May 4 comes to 62,568, down from an unusually high level of 120,608 this week.
- That's low but far from unprecedented. The week of March 4 in 2024 saw 61,131 container-equivalents imported, for instance.
What they're saying: "These are the most sweeping tariffs we've witnessed in our lifetime," Gene Seroka, executive director of the Port of Los Angeles, tells Axios.
- "I'm hearing directly from large retailers and manufacturers here in the United States that many have ceased all shipments from China," he says. "You're probably going to see two-thirds of normal cargo or less coming through the Port of Los Angeles in the weeks to come."
- On the other side, Seroka says U.S. export volume was down about 8% to 10% over the past couple of months, and that "we'll probably see a more precipitous drop with the advanced retaliatory tariffs put in place by China."
By the numbers: One closely watched leading indicator of container arrivals in the U.S. is the number calculated daily by Marine Exchange of Southern California, which adds up how many ships are on their way to the Port of Long Beach.
- That number has fallen significantly over the past week, from 55 on April 16 to 45 on April 21. The data are very noisy, however, and declines of that magnitude happen quite frequently. And moreover, the number is almost exactly the same as it was this time last year.
Yes, but: There's reason to believe that manufacturers have begun to put shipments from China to the U.S. on hold.
- Data from Vizion and Dun & Bradstreet shows that in the first week of April there was a 64% plunge in new bookings for shipments to the U.S. from China.
- The "widespread booking freeze" came "as shippers paused to reassess costs, timelines, and broader trade strategy," Vizion analysts write.
Between the lines: In normal times, trade volumes tend to mean-revert. A high number implies firms are stocking up on inventories. A low number means they're going to have to import more in the future.
- These are not normal times, however, so analysts are trying to work out whether the current downtick might be the start of a long-term secular downtrend.
- "The whole thing is so fluid," says Capt. Kip Louttit, who runs the Marine Exchange and oversees its dataset. "Here's what my stats are, you figure out what the reason is."
The bottom line: Trump has now demonstrated his ability to make tariff decisions in much less time than the two weeks it takes a container ship to cross the Pacific at 18 knots.
- For indications of where the future of trade might be headed, the White House, rather than the Port of Long Beach, therefore remains the focus of attention.
