They say economics is nothing without a measure of predictive power, and I haven’t issued any predictions recently. So let’s talk a little future.

It’s the end of April at the time of this issue’s writing, and trade flows to the US have taken a wild ride so far this year. We’re about to get our first of three January-March 2025 Gross Domestic Product prints, and we’re expecting to see just what a wild ride it’s been. In the first quarter of the year, US businesses rushed to fill their inventories of imported products, to get ahead of any tariff increases. As a result, US imports far exceeded US exports in Q1, so Net Exports (ex minus im) will be a significant drag on the GDP reading. Nonetheless, shipping volumes at major US ports rose by over 20% in February and March, and that’s now baked into the data.

But on April 2nd, as we all know, trump declared Liberation Day, and enacted the single largest tariff increase in our nation’s history. More on the new holiday, as well as the original list of tariff rates, can be found here. After a few days of chaos, and after having discovered that those tariffs were based on nothing, the rates were eventually changed to focus more on China specifically, bringing the global tariff to 10%, keeping specific 25% amounts on automobiles and on Canada & Mexico, but throwing a 145% tariff on China to compensate. The average US tariff level still sits above 20%, making this still the most protectionist period of American history in over 120 years.

So in the month that’s gone by, how have trade flows adjusted?

Well, as you might have figured out, a 145% tariff means roughly a 2.5x increase in the prices of goods. I’ve made this point previously but it bears repeating: when the cost of something gets too high, it becomes prohibitively high, and instead of eating that higher cost, consumers will simply stop wanting to pay it, stop buying the goods in the first place, and producers will similarly not want to produce it for those consumers. Recall in the Big Tariff Explainer (found here) that tariffs are extra taxes tacked onto prices, but payable to the Federal Government.

It follows, that if China doesn’t want its exports to lose their competitive advantage, and as long as the US administration is hostile enough to put up massive trade barriers, China is presented with a choice. In trump’s first term, China engaged in a much smaller-scale trade war than this time around, and after years of tit-for-tat, the two sides eventually signed a non-binding Phase 1 trade agreement. Even if that agreement has not been followed even to this day, it remained a signal of goodwill on the Chinese’s behalf to push towards solving the trade dispute, to the betterment of both countries.

But this time is different. China, much like Iran and Canada in their own ways, have much less of an incentive to kowtow to what trump wants out of them, considering they tried that the last time and it didn’t work. This time, they have an incentive to dig in and make it a protracted fight. This time, they have their own political winds at their back. This time, trump being in power isn’t a historical aberration, it’s just another chapter in a new book of global commerce. The rules are different, so they are playing differently.

Put simply, US imports have fallen off a cliff in April.

The backdrop: China exports roughly $440 billion of goods to the US. Some of the heaviest months of exporting are late March through early Summer, after the Chinese New Year and getting into the Back To School spending time, through to the holiday season. We should be seeing a lot of cargo ships loaded with goods going from China to the US around this time of year. Instead, the count has plummeted. Here’s Bloomberg’s count as of the middle of April:

The Port of Los Angeles is America’s largest port for container shipping. During the Covid lockdowns of 2020-21, the Port of LA experienced that infamous 120+ ship wait time, affecting supply of goods at our stores. The same sort of thing has begun in April 2025, but instead of a lack of workers able to process the goods, it’s a lack of goods themselves. The Financial Times tracks container volumes at the Port of LA, shown below:

The amount of container ships that China is sending to the US is also down sharply, about 40% lower than April 2024:

Similarly, the Seattle Times reports that the Port of Tacoma is suffering a 24% decline in cargo ships compared with early April 2024. The Port of Oakland shows similar numbers.

As of April 16th, CNBC reports notice of over 80 blank sailings from China to the US. A blank sailing at a port happens when a shipping carrier skips that port along its journey to and back from where it’s going. Ideally, there would be zero blank sailings to US ports. 80 is very high. During the height of Covid, there were 51 tracked blank sailings to US ports.

Chinese exporters are skipping US ports, and sending their cargo elsewhere. Total Chinese exports so far in 2025 have only decreased slightly, but exports to the US are down 8.7% compared to last April. That suggests that China is increasing exports to other countries while it is decreasing exports to the US.

Drewry, a UK-based supply chain analysis firm, tracks total blank sailings for US West Coast ports, shown below for weeks 18 through 22 of 2025 (April and May), broken down by shipping company and percentage of blank sailings:

All of this to say, we’re looking at a serious drop in imports over the next couple of months.

US shipping and logistics is its own industry, and if there are shortages that result from this, they won’t happen overnight. Liberation Day was less than a month ago, and it takes roughly 2-3 weeks for cargo ships to get here from China, so we’ve only really gotten a couple weeks of hard data on the slowdown. From there, goods get processed at the ports, and are trucked across the country, where they eventually find their homes on company shelves and warehouses. The massive frontloading of imports before this slowdown should also dampen its effects, in the short term. Former trump Treasury Secretary Gary Cohn has said he believes we will start to see shortages from April tariffs by the last week of May.

But that doesn’t mean we’re out of the woods. The best-case view in a lot of influential people, from Jamie Dimon to Ray Dalio to Craig Fuller, the CEO of FreightWaves, is now a mild US recession as we adjust to the new reality of lower import volumes, and lower domestic consumption as a result.

$440 billion is a lot of goods, but it’s still below 20% of our entire import base. It remains to be seen which areas of the goods economy will be affected more than others. You can probably deduce on your own that simple manufacturing, like children’s toys and plastic items, would probably be hit more than more complex stuff like desktop computers. But food, raw energy materials, these things could be a popular target as well.

I am not telling you to go out and start hoarding toilet paper again, but you should be very cognizant of where the goods you like to buy are coming from. I personally have done some stocking up on basic household supplies and non-perishable food. Covid wasn’t too long ago, so think back to the times of panic buying and empty shelves. You might want to get ahead of that, before it happens again.

I would love to be wrong, but barring a reversal in our trade policy, it looks like we’re in for a summer of scarcity. Hopefully you make the right decisions in preparing for it. We’re all on this ride together, so make sure you can ride it all the way to the end, and still be able to get off when it’s time to find the next ride.

Categories: Uncategorized

Tags: china, economy, politics, tariffs, trump