In a dramatic turn of events, the United States is experiencing significant repercussions from its escalating tariff war with China, raising concerns of a potential supply shock reminiscent of the COVID-19 pandemic. Recent reports indicate a sharp decline in maritime and air cargo bookings from China to the US, signaling the far-reaching impacts of the trade conflict on the American economy.
The Financial Times highlighted that container bookings from China to the US have seen a drastic reduction following the US government's imposition of a hefty 145% tariff on Chinese imports. The Port of Los Angeles, a major hub for Chinese goods, anticipates a one-third drop in container volume in early May compared to the same period last year. This downturn is echoed in the air cargo sector, where bookings have also plummeted.
Bloomberg estimates suggest that the tariff-induced decline in cargo transportation could be as high as 60%. Flexport's CEO, Ryan Petersen, confirmed that maritime container bookings from China to the US have fallen by over 60% across the industry since the tariffs took effect.
Despite President Donald Trump's recent suggestions of tariff flexibility, Bloomberg warns that the damage may already be done, with a supply shock potentially spreading throughout the US economy and lasting until the holiday season.
As trade companies delay shipments, hoping for a resolution, goods are piling up in bonded warehouses, awaiting the outcome of tariff negotiations. Nathan Strang of Flexport predicts skyrocketing freight rates if tariff reduction talks are successful.
The situation has led to an increase in canceled ship sailings, with companies like Hapag-Lloyd and TS Lines reducing their Asia-US routes due to decreased demand. The Port of Los Angeles alone expects to see 20 canceled sailings next month, resulting in 250,000 fewer containers arriving on US shores.
Amidst these challenges, John Denton of the International Chamber of Commerce warns that accessing the US market now involves the highest costs since the 1930s. With the tariff standoff showing no signs of resolution, the specter of supply shortages and economic disruption looms large for the US.
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