The impact of the trade tariffs with China is starting to come into focus. Anecdotal information shows that trade between the U.S. and China may be about to slow down dramatically.
Bloomberg reports that May cargo shipments from China, which is facing a tariff of 145%, could be down as much as 60%, according to one estimate. By mid-May, companies are expected to have a difficult time restocking their inventory of goods. That led officials from some of the nation’s largest retailers, including Home Depot, Target and Walmart, to meet with President Donald Trump last week and warn that consumers may soon start to see empty shelves and higher prices.
According to the Financial Times, the Port of Los Angeles, the main route of entry for goods from China, expects scheduled arrivals in the week starting May 4 to be a third lower than for the same time one year ago. Airfreight handlers have also seen a steep decline in bookings, and the container tracking service Vizion reports that bookings of 20-foot shipping containers from China to the U.S. were 45% lower than one year ago as of mid-April.
Torsten Slok, chief economist for Apollo Management, which manages about $700 billion of assets, reported in the Apollo Academy blog on April 25 that daily shipping data from China showed that container traffic from China is “collapsing.”
Slok wrote that the consequences of the slowdown will be empty shelves in the U.S. in a few weeks, increased inflation and COVID-like shortages for consumers and for companies using Chinese products. He forecasted that the collapse in trade would lead to significant layoffs in the trucking, logistics and retail sectors.
According to an analysis prepared in December by the National Association of Home Builders, the tariffs will increase the cost of household appliances, as 54% of imports come from China. The tariffs will also increase the cost of imported residential building materials.
But there is movement on the part of the Trump administration and the Chinese government to find a way out of this trade war. Recently, the president told reporters he was willing to lessen the tariffs against China, and the Chinese government has reduced its 125% reciprocal tariffs on certain U.S. goods.
While Trump has said negotiations with China have begun, the Chinese government denies there are any trade talks underway. Earlier today, The Associated Press reported that Chinese officials say they reject what they call bullying by the Trump administration and have the capacity to protect jobs and limit damage from the higher tariffs.
