While there was a large amount of speculation regarding an anticipated drop in United States-bound import declines driven by the myriad trade policy and tariff actions put into action by President Trump since his return to office, that speculation has become reality, based on sentiment from various industry stakeholders.
As previously reported, the ongoing shift in tariff levels and related announcements has collectively brought about a lingering sense of uncertainty, and by extension, confusion, for global supply chain stakeholders, with the expectation that until there is more clarity, import levels are expected to decline, leaving to many unanswered questions as well.
Even though a 90-day pause on reciprocal tariffs issued by the White House remains intact through July 9, a 145% tariff on most goods imported from China to the United States is in effect, as well as China’s retaliatory 125% tariff on goods coming there from the U.S. And well before these tariffs were implemented, retailers, manufacturers, and wholesalers were rushing to get cargo into the U.S., in order to avoid having to pay the hefty tariff increases.
That said, it is fair to say that global trade conditions have changed, in short order. Which was made clear in an analysis issued by Chicago-based project44.
The firm noted that there has been a 300% increase in blank sailings from China to the U.S. since tariffs announced by the White House last month were rolled out, which it said is a result of orders from China to the U.S. “plummeting in response.” And it added that imports from China to the U.S. have been higher compared to last year, “possibly illustrating pull forward inventory, but have fallen for two consecutive weeks compared to last year when the 125% tariff passed.”
What’s more, in an April 29 Bloomberg report, Port of Los Angeles (POLA) Executive Director Gene Seroka stated that the 90-day pause on the implementation of reciprocal tariffs does not provide enough time for U.S.-based importers to make needed changes related to procurement.
“We are beginning to see the flow of cargo to the Port of Los Angeles slow,” Seroka said. “It’s my prediction that in two weeks, arrivals will drop by 35% as essentially all shipments out of China for major retailers and manufacturers have ceased. And cargo coming out of Southeast Asia locations is much softer than normal with the tariffs now
in place.”
On a recent POLA-hosted media call, Seroika explained that the increased tariffs will more than likely increase costs for anything bought from China by two-and-a-half times. He also noted that decisions on orders and factory selections take months, and once a ship leaves its origin in Asia, it takes another couple of weeks before the cargo arrives here.
“My hope is that this [pause] brings people to the table to negotiate, or at the very least, provides a clearer line of sight on what the future holds,” he said. “Until then, we can expect a slowdown in global trade as businesses try to understand the implications of a very uncertain market. Many companies are telling me they’ll delay hiring and capital investments for the time being.”
Data recently issued by London-based maritime consultancy Drewry is calling for a 1% decline in global container port volume in 2025, related to U.S. tariff and trade policy actions, something which has occurred in only two other years, the financial crisis in 2009 and the pandemic in 2020.
“China will be the hardest hit among countries exporting to the U.S.,” said Drewry. “Because China dominates U.S. imports of consumer/retail, furniture and industrial goods imported by containership, these sectors will also suffer some of the highest average import tariffs. Sensitivity of U.S. consumers to higher prices will lead to a reduction of imports in these product categories, as they cannot be replaced by same-price alternatives.”
The firm also noted that exporters and importers, as well as ports, carriers, and forwarders, are facing what it called considerable uncertainty in global market conditions. It also observed that tariff changes and uncertainty create swings in demand volumes, and also disruptions from cancelled sailings, port congestion and issues from empty container stocks such as the pandemic.
That sentiment was supported in comments from Freightos, a SaaS-enabled logistics technology provider focused on instant freight quotes for freight forwarders and shippers.
“With a minimum 145% tariff on all goods from China, many U.S. importers are canceling orders and pausing shipments in hopes that direct negotiations—which have not officially begun yet—between the two countries will result in de-escalation and lower tariffs soon,” it said. “In the meantime, reports on the drop in China-U.S. ocean freight demand range from around 30% to more than 50% in the last few weeks. Many China-reliant US importers may be well positioned to completely pause shipments from China—at least for a few weeks—because of inventory surpluses built up over the last few months via frontloading ahead of the expected tariffs. If tariffs are not lowered within that window, U.S. consumers could start seeing inventory shortages for some types of goods—especially items like toys, baby products and sporting goods, the majority of which are manufactured in China—and significant price increases as importers are forced to face very steep duties.”
Paul Bingham, Director, Transportation Consulting, for S&P Global Market Intelligence, told LM that factors like blank sailings, capacity issues, the sharp drop-offs in order shipping as the last arrivals of vessels from the pre-China tariff escalation arrive, amid the 90-day pause, are collectively leading to a cliff, of sorts.
“Once we hit that cliff, it is very likely, if things don’t change, we are going to see what we are already seeing with China-U.S. trade, with dramatic drop-offs in shipping volumes, and port activity will nosedive,” he said. “There are commodities moving that have inelastic demand, for which importers will have to pay extreme tariffs to acquire them. With all of the downstream impacts of that it’s not just finished goods for retail sales—the substantial proportion of trade which feeds U.S. manufacturing—is also suffering. It’s going to hammer the economy in ways, both directly and indirectly, and it already is.”
As an example, he cited the U.S. agricultural market, which is already dealing with cancelled orders, coupled with sales and production incentives quickly falling away—and leading to revenue losses and reductions in employment output within the economy likely to quickly follow.
“You can argue that we’re already we’ve already seen it in the first quarter,” he said. “The impacts are real right now. It’s not something that’s still ahead of us. It’s hitting the economy already. And if there’s no relief, if we don’t have trade deals negotiated that reduce the tariffs in conjunction with the uncertainty, the impacts are going to likely to continue to grow this year. And as the inventories are drawn down, or companies finally are forced to make a decision, you do you place the next order? Do you go forward with the next manufacturing production cycle?”
