More than a month has passed since the 'tariff war' between the United States and China began, and the Port of Los Angeles (LA), the largest container port in the U.S., is taking the brunt of it. After high tariffs were imposed on Chinese products, the number of cargo containers arriving at the LA port has sharply decreased, raising concerns that the situation will become even more serious going forward.
According to the Washington Post (WP) on the 11th (local time), the number of cargo containers that arrived at the Port of Los Angeles (LA) last week was about one-third of the level from the same period last year. This is a more serious level than during the 2008 financial crisis, and WP reported that more than one-fifth of the super large vessels scheduled to head to LA this month have already canceled their berthing. The container import volume at the LA port is expected to decrease by 25% this month.
The machinery at the LA port, which should be busy under normal circumstances, has also come to a standstill. The Washington Post (WP) noted that "the overall supply chain congestion can be observed at Waterfront Logistics, located a few miles from the port," adding that "unused trailer chassis are stacked high in the yard, and there are hundreds of containers left unattended nearby." Waterfront is a third-party logistics (3PL) company equipped with truck transportation vehicles, warehouses, and cargo transshipment facilities.
Previously, the Donald Trump administration imposed a high tariff of 145% on Chinese goods, to which China responded with 'retaliatory tariffs.' The tariff war between the two countries has had a significant impact on Pacific trade in a variety of goods including electronics, clothing, furniture, and industrial parts. In fact, last month, China's total exports increased by 4%, but exports to the U.S. decreased by 21%. Chinese products are now headed towards Europe, Southeast Asia, and Africa.
Joseph Gregorio Jr., Chief Operating Officer (COO) of Pacific Companies, which provides cargo transport, storage, and handling services, said, "Under the current state, we cannot last even 30 days." If the Trump administration pushes for a transition to a self-sufficient U.S. economy, it is anticipated that not only the LA port but also other major ports such as Seattle, Houston, Baltimore, and New York will face worsening conditions.
The stagnation at the LA port is leading to a decrease in local jobs. According to the LA Harbor Department, 1 in 9 individuals in five counties in Southern California is engaged in cargo-related work, and the number of workers including transporters, brokers, warehouse laborers, truck drivers, and port workers exceeds 1 million. TGS Logistics, a trucking company based in Fresno, California, recently laid off 20 truck drivers and 6 office staff.
The inventory situation for importers is also worsening. Currently, the inventory levels of retailers are lower than during the COVID-19 pandemic. This means that some products may be out of stock in stores within weeks. A representative of a U.S. audio equipment importer who requested a shipment halt from a Chinese supplier stated, "The tariff to be imposed on the products currently stacked in Chinese factories is over $1 million," adding, "For small businesses, this is an unbearable level."
Mark Muro, a senior researcher at the Brookings Institution, noted, "Trump's vision for a self-sufficient economy aims to reduce imports and increase manufacturing." He added that if this change materializes, geographically, Democratic-leaning coastal areas will be hit harder, while Republican-leaning inland areas will benefit from new factory establishments.
WP commented that "while U.S. and Chinese delegations are holding talks in Switzerland over the weekend, dockworkers are reducing their working hours," and stated that "the sudden changes happening here illustrate the costs demanded by the transition from the so-called 'world trade order sacrificing Americans' to the 'golden age' promised by President Trump."