Losses in demand from Trump tariffs hit U.S. ports and air transport

Donald Trump's trade war with Beijing began to impact the wider U.S. economy as container port operators and air transport managers reported a sharp drop in cargo shipped from China.

The logistics team said that container bookings in the United States have dropped sharply since imposing a 145% Chinese import tariff on Chinese imports.

The Los Angeles port is the main route of entry for Chinese goods, with scheduled arrivals expected to be lower for the third time a year ago from May 4, and Airfreeight Handlers also reported that the booked Sharp fell.

Bookings for standard shipping containers from China to the U.S. have dropped 45% from last four years, according to the latest available data from container tracking service Vizion.

International Chamber of Commerce Secretary-General John Denton said the turbulence in U.S. trade flows in China reflect that traders “kick out decisions on the road” as they wait to see how Washington and Beijing can quickly reach a deal to lower tariffs.

After Trump's announcement on “Liberation Day” on April 2, a survey of ICC members conducted in more than 60 countries showed that the expectation of trade will be permanently affected, regardless of the outcome of the upcoming negotiations.

Denton said the cost of entering the U.S. market will be the highest since the 1930s. He refers to benchmark tariffs for all countries, saying: “It is almost acceptable to have 10% as the lowest fee to enter the U.S. market, regardless of whether other uncertainties may exist.”

Washington and Beijing show signs of starting to feel the impact – both sides announced tariff exemptions on important products in their respective economies this week, with Trump predicting a “significant drop” of 145%. However, China said on Friday that it did not hold talks with the United States.

As freighters say supply chains are moving, they set out from China to face tariffs due to the initial containers that face tariffs.

Nathan Strang, director of marine freight at U.S. logistics group Flexport, said the company is waiting to ship goods, and Washington and Beijing are expected to agree to a tax reduction agreement.

Logistics executives say U.S. importers hope to run out of stocks before importing fresh stocks from China. They also hold inventory in bond warehouses where stocks can be tax-free and taxes paid on withdrawal or transfer them to other nearby countries such as Canada.

“They sit on the goods from their origin, on the goods from their destination,” Strangth said.

Hapag-lloyd, one of the world's largest container shipping lines, said Chinese customers have cancelled about 30% of their bookings in China.

In recent weeks, Taiwan-listed Taiwanese container transport company TS Lines has suspended one of its Asia to the U.S. West Coast service. “There is no need,” said one person from the group.

The declines in these volumes have been sent to land in Los Angeles, according to Sea-intelligence, a transport data analyst who reported a surge in “blank sailing” that the vessel was cancelled for Chinese reservations.

Bookings for Asia to North America were 400,000 less than the planned containers in four weeks from May 5, a 25% reduction from the planned amount in the same period in early March, after tariffs were imposed.

The Port of Los Angeles alone is expected to have 20 blank voyages in May, representing more than 250,000 containers, up from six in April.

This is a significant decline compared to this week, when arrivals rose 56% year-on-year, suggesting that importers have been carrying forward cargo from other Southeast Asian manufacturing centers such as Cambodia and Vietnam, which have enjoyed a 90-day “suspension”.

According to the logistics hub, container prices reflect changes in the supply chain, with the price of 40-foot containers in Vietnam rising 15%, while the main routes in China fell 27%.

“Rates from other Asian countries to the U.S. may continue to rise before the July tariff deadline,” said Judah Levine, head of research at Freightos.

Air freight volumes also fell sharply, with bookings for its members falling by about 30%.

“Many members have just stopped receiving orders from China,” said Executive Director Brandon Fried. “It will also have a whiplash effect on prices and booking rates as traders react to every news in the White House.”

The industry is expected to be further hit by the U.S. decision to close its “De Minimis” program, which allows imports of goods worth less than $800 to be tax-free, an important avenue for e-commerce retailers such as Shein and Temu. Chinese goods will be exempted from loss from May 2.

Lavinia Lau, chief commercial officer of Cathay Pacific, whose air cargo business contributed a quarter of its revenue, said it expects a “softening” demand between China and the United States due to changes in tariffs and De Minimis rules.

Hong Kong freight forwarding easyway Air Freight said business from China to the United States fell by about 50%.

The e-commerce director noted that freight demand has weakened. Wang Xin, head of the Shenzhen Cross-border E-commerce Association, said: “There are few price quotations related to air freight.”

Even though storage and supply chain repositioning helps mitigate the reduction in freight volumes for consumers, transporters and retailers are still starting to feel the impact of slowing imports.

Arizona Knight Swift Transportation, one of the largest American trucking companies in Arizona, warned that the expected volume was lower, citing uncertainty caused by the tariff threat.

CEO Adam Miller said some of the group's biggest clients “expressed concern” that tariff costs will drop in May.

“Some people told us that yes, they have canceled orders, or they have stopped ordering, especially from China, and we will figure out how to adjust their supply chain to avoid costs,” he said.

Retail consultants said the procurement method reflects the softening of consumer confidence index for three consecutive months.

Momentum Commerce CEO John Shea, who sells about $7 billion a year on Amazon, warned of the potential “double blow” of rising prices and falling consumer spending.

“The evidence we’re seeing is that consumers are starting to trade … and rising at the same price,” he said.

Clara Murray's data visualization