Tensions are running high between Beijing and the White House. As a trade war presses on, major ports like Los Angeles and Long Beach are beginning to feel the effects. The number of freight vessels leaving China and heading to Southern California ports has decreased by 29% week-over-week. Year-over-year, this is a 44% decline in vessels scheduled to arrive in the first week of May.
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The Trump administration is now signaling potential tariff reductions for China. While discussions are ongoing, one senior White House official suggested that China tariffs could be reduced to between 50% and 65%. The ripple effects of less trade with China are impacting suppliers across the supply chain. For example, the significant decrease in TEUs (twenty-foot equivalent units) compared to the previous weeks is affecting ground transport linked to ports. According to DAT Freight & Analytics, there has been a notable drop in available truck loads nationally.
Treasury Secretary Scott Bessent suggested that the trade war with China is unsustainable and de-escalation may be coming soon. The vessel drop coincides with increased canceled sailings from ocean carriers on Pacific routes. Several alliances between shipping companies have reported cancellation rates, with the Gemini alliance having the highest rate. Ocean carriers are trying to balance the pullback in orders due to tariffs and trade war tensions, with a number of blank or canceled sailings out of China.
China has signaled openness to trade talks with the U.S., but warned against negotiations under continued threats from the White House. Some in China view President Trump’s comments as a sign of him backing down, and there are U.S. domestic factions that are cheering as much. Even with tariff reductions, however, U.S. markets could remain largely closed to many Chinese manufacturers. Some analysts believe trade between the two countries could dry up within months at the current high tariff levels.
Despite the potential for tariff reductions, it remains likely that President Trump will still pursue his administration’s goal of decoupling the U.S. from China’s economy. The expressions of openness to a deal represent a shift from recent months, during which the two countries exchanged reciprocal tariff increases. A delegation of senior Chinese officials is in Washington for meetings, but has not scheduled meetings with the administration.
