The U.S.-China Trade War Fallout Begins
The Port of Los Angeles is expecting a significant decline in cargo traffic until a resolution on tariffs is achieved. The Trump administration has not provided any indication of ongoing negotiations, and time is crucial, as noted by a chief market strategist at JPMorgan.
The trade conflict between the U.S. and China has commenced, leading to a predicted reduction in imports next week by more than a third compared to the previous year, according to projections from the Port of Los Angeles.
Gene Seroka, the executive director of the Port of Los Angeles, highlighted a sharp decrease in volume, with major American retailers halting shipments from China due to the tariffs. This drop is expected despite President Donald Trump’s temporary suspension of a broad tariff regime and the imposition of a 10% tariff on some countries. However, China faces a 145% tariff, leading to a retaliatory 120% duty on American goods. No agreement is currently in place, and it remains unclear if negotiations are occurring. Treasury Secretary Scott Bessent has urged China to engage in discussions for a deal, although nearly half of the port’s activities involve China.
Seroka further explained that retailers might face limited choices in about five to seven weeks as inventories deplete, suggesting potential shortages in specific products.
Seroka remarked that the situation results in losses for both sides as China serves as a crucial manufacturing base for the U.S., causing mutual economic strain.
Bessent has frequently criticized the tariffs on China as unsustainable due to the trade imbalance favoring China. He suggests that China’s introduction of tariff exemptions indicates a desire for de-escalation, but he warned of possible escalations if that does not occur. The Trump administration appears to have taken a softer stance recently, hinting at a substantial reduction in tariffs on Chinese goods, potentially aiding market recovery.
Early Tuesday, Gabriela Santos, JPMorgan Asset Management’s chief market strategist for the Americas, emphasized the urgency for tariff reductions on China, noting the unsustainability of the current tariffs and the need for tangible action to alleviate market concerns. She stressed that this issue pertains to supply chain disruptions rather than just increased prices.
This information was initially reported by Fortune.com.
