- The first ships carrying Chinese goods under the new 145% US tariff have arrived, triggering a steep drop in imports and fears of inflation and product shortages.
- The Port of Los Angeles reports a 35% decline in imports, with cancellations and shipment deferrals indicating significant supply chain disruptions.
- Retailers are struggling with rising costs, and analysts warn of a looming drop in inventory levels and a sharp contraction in consumer choice.
The first cargo ships transporting Chinese goods affected by the steep 145% US tariffs are now arriving at ports in California, signaling the start of a major shake-up in US-China trade dynamics. As a direct result, Chinese imports have dropped dramatically, and American businesses are now preparing for price hikes and potential product shortages, according to Marine Insight.
Shipping activity has notably slowed at the Port of Los Angeles. Executive Director Gene Seroka reported, “Imports this week have dropped by around 35% compared to last year.” He also highlighted that the volume of Chinese cargo on these ships has plummeted by more than 50%.
Order Cancellations and Sailing Cuts Underscore Importers’ Retreat
Many US importers have begun canceling previously placed orders in an effort to avoid paying the steep new duties. “Retailers and importers alike are telling me that the products now cost about two and a half times more than they did last month,” Seroka added.
Of the 80 ships initially scheduled to dock in Los Angeles this May, around 20% have already been canceled. June is showing similar signs of strain, with 13 sailings scrapped as companies reconsider sourcing goods from China due to cost concerns.
Storage in China is Cheaper than Importing to the US
Flexport CEO Ryan Petersen explained a surprising shift in logistics strategy: some retailers are now choosing to store goods in Chinese warehouses rather than bringing them to the US. He noted that current storage costs overseas are cheaper than the new import taxes.
Petersen warned of dramatic implications, estimating that the continuation of this trend could result in “a 60% decline in containers,” adding that this would mean “60% less stuff arriving,” which could quickly translate into reduced inventory and fewer consumer options.
Bleak Forecasts for Second Half of 2025
The National Retail Federation anticipates an overall 20% drop in US imports in the second half of 2025. The decline in Chinese shipments is expected to be even more severe, with JP Morgan forecasting a staggering 75% to 80% plunge.
Currently, consumers are still purchasing goods stocked before the tariffs took effect. However, inventories are depleting rapidly. Petersen cautioned that by summer, this could lead to “shortages and empty shelves.” Seroka supported this outlook, stating, “While shelves may not go empty, product variety will shrink, and the cost of preferred items will rise.”
Tariff-Driven Surge Contributed to Record Trade Deficit
The rush to import goods before the tariff implementation on April 2 helped push the US trade deficit to a record $140.5 billion in March. Economist Daniel Vielhaber from Nationwide commented in a client note that this front-loading of imports also contributed to inflationary pressures, which are now expected to weigh further on consumer spending and slow economic growth.
Timing Critical for Duty Assessments
Despite the April tariff hike, some goods are still entering the US tariff-free if they were shipped before the announcement and arrive before May 27, 2025. Economists at Wells Fargo anticipate that April data will show a final wave of untaxed imports, followed by a significant trade contraction.
OOCL Violet Becomes Symbol of Tariff Fallout
One of the vessels caught in the tariff storm is the OOCL Violet, which recently docked at the Port of Long Beach. The ship began loading in Dalian, China, just before the tariffs rose. It carried approximately $564 million in goods, with 40% now subject to the 145% tariff—translating to over $417 million in new duties.
By the time it departed Shanghai, another round of tariff increases had just taken effect, adding an estimated $220 million to the cargo’s value.
Products onboard included lawnmowers, fish, sneakers, forklifts, bras, pasta, wheelchairs, medical gloves, and car windshields. A representative from Worldlawn Power Equipment, which had goods on the ship, said, “There were goods already on the water,” and admitted the company was still evaluating the impact. “We’re trying to reassess our supply chain strategy,” the representative explained, expressing uncertainty about whether the tariff shift would be temporary or long-lasting.
Tariff Impacts Still Unfolding
The financial implications for importers will ultimately hinge on how customs processes these goods and the details declared during clearance. Bloomberg, citing IHS Markit data, emphasized that final duties could still vary based on timing and classification.
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Source: Marine Insight
