Busiest US seaport takes hit from 145% China tariffs, worries remain

Straits Times

14 hours ago

May 2025 imports to the Port of Los Angeles are down 9 per cent year-on-year. PHOTO: REUTERS
LOS ANGELES - Imports to the busiest US seaport in Los Angeles dropped 9 per cent year-on-year in May and could remain muted through the remainder of 2025, after companies responded to President Donald Trump's 145 per cent tariffs on China by cancelling or putting holds on shipments, according to port officials.
China is the top US supplier of seaborne goods, and Los Angeles is the No. 1 port for those imports. Domestic businesses ranging from retailer Walmart to automaker Ford rely on the toys, furniture and auto parts that land on its docks.
The Port of Los Angeles handled the equivalent of 355,950 20-foot shipping containers of imports in May, when the 145 per cent tariffs began to show up in data.
'May marked our lowest monthly volume in over two years,' the port's executive director Gene Seroka said on June 13 .
'Many importers just simply slammed on the brakes.'
The ports of Los Angeles and Long Beach handle 31 per cent of US ocean trade and are a barometer for US economic activity.
Long Beach has not reported May results. Its CEO previously forecast a more than 10 per cent drop in May imports.
The world's two biggest economies agreed to a 90-day pause on tit-for-tat tariffs in May, and the US lowered the duty on many Chinese goods to 30 p er cent from 145 per cent . The US and China this week agreed to maintain that lower rate, potentially defusing a high-stakes trade dispute.
Ocean shipping company Maersk in a customer advisory on June 12 said volumes from China to the US are rising following the May 12 tariff adjustment to 30 per cent.
Port executives and shipping consultants also expect imports from China to rebound, albeit at a more moderate level as 30 per cent duties represent a significant cost increase for importers.
Seroka said cargo for June appears to have returned to more normal levels with a dozen ships at the port on June 13 .
'It's one of the very few double-digit ship days we've had in weeks,' said Mr Seroka.
Nevertheless, his outlook for the remainder of the year is muted because consumer demand is volatile and importers still face a 30 per cent cost increase on goods from China.
'I don't see the surge that some observers have called for.'
Industry forecasts call for 2025 imports to drop from 2024 due to continued uncertainty over US tariffs, which also are subject to court battles.
US consumer sentiment improved for the first time in six months in June as trade tensions between the US and China eased. But households remained worried about the economy as tariffs threaten to send prices even higher.
Inventories are growing faster than sales at the most sensitive consumer discretionary companies , such as fitness apparel seller Lululemon, said Jefferies analysts in a client note on June 13 . Retailers are importing selectively to avoid having to discount excess stock.
The full price hit from tariffs looms as US companies work through stockpiles built before the duties went into effect, said director of economics at Yale's Budget Lab Ernie Tedeschi .
In January 2018, Trump's first administration put tariffs on washing machines. The effect did not show up in consumer price data until three months later, Mr Tedeschi said.
'It takes time for these tariffs to go through.' REUTERS
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