Ship happens: The ripple effect of US trade tensions

Following an extremely strong Q1 2025 where port volume surged, we're starting to see the impacts of recently enacted tariff policy. Ongoing trade tensions have impacted shipments from China to the U.S., primarily due to the increased tariffs implemented by the Donald Trump administration. This has led to a notable decrease in import volumes at major U.S. ports, with the Port of Los Angeles anticipating a 35% reduction in coming weeks. The potential disruption in shipments has many major retailers and manufacturers exploring options to import from various countries in Southeast Asia such as Vietnam or Malaysia to mitigate the impact of tariffs on their business.

In the first quarter, the ports of Los Angeles and Long Beach experienced a 14% increase in import containers as companies expedited imports to avoid potential tariffs, according to maritime consultancy Drewry. However, some retailers have halted shipments due to uncertainty, leaving only a portion of their seasonal inventory available. The abrupt stop in exports from China and the increased demand from Southeast Asia are raising concerns about future cargo demand and shipping rates.

Tariff policies have heightened uncertainty for both businesses and consumers. Companies are grappling with complex decisions regarding inventory and expansion, which could influence economic growth. Consumers, anticipating 5% inflation over the next year as per the latest University of Michigan survey, must decide between spending now or saving. The choices they make will be closely observed through retail sales, credit card spending data and company commentary.

All market and economic data as of 04/29/25 are sourced from Bloomberg Finance L.P. and FactSet unless otherwise stated.

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