- The U.S.-China trade war fallout has begun. The Port of Los Angeles anticipates plummeting cargo traffic until a deal on tariffs is reached, but the Trump administration has not indicated whether negotiations are happening. Time is running out, a JPMorgan chief market strategist said.
The U.S.-China trade war has begun, so say goodbye to the goods. The Port of Los Angeles anticipates a drop-off in imports next week compared to a year ago, totaling more than a third of typical incoming cargo traffic.
“It’s a precipitous drop in volume, with a number of major American retailers stopping all shipments from China based on the tariffs,” Gene Seroka, executive director of the Port of L.A., said on CNBC Tuesday morning.
While President Donald Trump pressed pause on his sweeping tariff regimen and placed a 10% blanket tax on other countries, he taxed China more. He placed a 145% tariff on China, which retaliated with a 120% duty on American goods. No trade deal has been made, and it is unclear whether there are negotiations happening. Treasury Secretary Scott Bessent has put the onus on China to come to the table and ink a deal. Still, just under half of the port’s business emanates from China, Seroka explained. So things could be bleak until then.
“What we’re going to see next is retailers have about five to seven weeks of full inventories left, and then the choices will lessen,” Seroka told CNBC. That doesn’t mean shelves will be empty, but in Seroka’s hypothetical, it could mean if you’re out shopping for a blue shirt, you may see 11 purple ones—but only one blue that isn’t your size and is costlier.
“Nobody wins,” he said. “China is America’s factory.” He later said: “The pain is felt on both sides of the Pacific.”
Bessent has repeatedly called the tariffs on China unsustainable because the country sells much more to the U.S. than the other way around. He appears to believe China wants a de-escalation because of the exemptions to tariffs it has introduced, but he has still threatened an escalation ladder if that isn’t the case. Nonetheless, the Trump administration, according to a recent LPL Financial note, has adopted a softer tone on China. Less than a week ago, the president floated the notion that tariffs on Chinese goods would be reduced substantially.
“We’ll see what that means, but the conciliatory tone was enough to add fuel to the market recovery,” according to LPL. So far, the three major indexes are relatively flat in early afternoon trading.
Earlier Tuesday, Gabriela Santos, JPMorgan Asset Management chief market strategist for the Americas, told CNBC: “Time is running out to see a lessening of the tariffs on China.” Everyone knows the tariffs are unsustainable, she said, but markets need to see them actually drop.
“We’re not talking about higher prices and companies figuring out ways to pass that on,” Santos said. “We’re talking about actual disruption to the supply chain.”
