Tariffs cause major drop in China-US sea cargo

Following the onslaught of US President Donald Trump’s tariffs, there has been a significant drop in sea cargo shipments from China to the US.

According to global logistics company Flexport, sea cargo shipments from China to the US fell by 65% within three weeks after the tariffs took effect in early April, due to a drop in demand for goods on which China imposed a 145% tariff.

Sea cargo ships canceled approximately 80 voyages from China to the US this month. This is nearly 60% more than the voyages canceled during the peak period in May 2020, when Covid-19 disrupted the supply chain.

The Port of Los Angeles, a major entry point for Chinese goods into the US, expects a one-third reduction in the number of incoming ships next week compared to the same period last year.

Since China is one of the US’s largest suppliers for everything from kitchen appliances to combs, the chief economist at Apollo Global Management said last week, “The result of the tariffs will be empty shelves in US stores within a few weeks and Covid-like shortages for consumers and firms using Chinese products.”

According to Apollo, the drop in sales is likely to lead to layoffs in the trucking, logistics, and retail sectors and a recession over the summer.

To save time, US companies are importing more goods from other manufacturing hubs like Vietnam and Cambodia, where tariffs have been suspended. Nevertheless, thousands of businesses will need to replenish their stocks by mid-May, when retailers typically tend to increase their inventories ahead of the back-to-school and holiday seasons.

Executives from Walmart, Target, and Home Depot told Trump last week that they foresaw serious risks, such as shelves remaining empty and prices increasing. When relief will come is uncertain: The Trump administration said active negotiations with China were ongoing, but China denied this.

Even if tariffs are eased, a sudden surge in shipping demand could strain sea transport. Vespucci Maritime CEO Lars Jensen told Bloomberg, “Ports are designed for stable flows, not for intermittent volume changes.”