Decline in Container Volume Signals Trade War Impact

Categories: California Business NewsCalifornia News

Shipping containers at the Port of Los Angeles, representing the decline in trade volume caused by the U.S.-China trade war.

News Summary

Eastbound container volume from Southern California has plummeted to a six-month low, impacted by the U.S.-China trade war and high tariffs. Reports indicate a 5% decrease from the previous week and a 10% drop compared to the four-week average. While a temporary truce has reduced tariffs, ongoing repercussions are evident as retailers face low inventory levels, threatening product availability. With significant implications on the local economy, the decline in container volume underscores the lasting effects of trade tensions.

California – Eastbound international container volume from Southern California has dropped to its lowest level in six months, highlighting the ongoing impact of the U.S.-China trade war. During the week ending May 18, the volume declined by 5% from the previous week and 10% compared to the four-week rolling average. This decline is a direct result of steep tariffs imposed on Chinese imports, which have reached levels as high as 145% on specific goods.

The latest report from RailState indicates that international container volume on eastbound trains is down 26.3% from the peak week observed from March 3 to March 9 in 2025. This surge in early March was primarily driven by importers rushing to bring in goods ahead of the initially scheduled tariff increases.

While a 90-day truce has been agreed upon between the U.S. and China, which has temporarily reduced tariffs to 30% on most Chinese goods, the repercussions of the previously high tariffs continue to affect trade and logistics in the region. Experts anticipate a potential spike in imports as businesses attempt to build their inventories during this pause. However, the immediate effects of prior tariffs remain significant, as evidenced by the declining container volume.

Current Trends in Shipping

The report details a significant reduction in the arrival of shipping containers to the Port of Los Angeles, projected to decrease by 35%. The port anticipates that cargo shipments from China will cease altogether and that traffic from Southeast Asia will also diminish. In the following weeks, forecasts estimate a decline of 28.6% in cargo volume, dropping to 85,486 TEUs, and a nearly 33% reduction, resulting in 74,925 TEUs in subsequent weeks.

For context, TEU (Twenty-foot Equivalent Unit) is a standard measure used in the shipping industry to describe the capacity of container ships and terminals. The significant drop in TEU volume indicates that businesses are struggling to maintain import levels. In March, the port saw a 15% year-over-year decline in TEUs, marking the fourth consecutive month of downward trends.

Impact on Retail and Economic Growth

With tariffs putting pressure on the supply chains, major retailers report that inventory levels are alarmingly low, with only a six to eight-week supply available. This scarcity could lead to product shortages for consumers in the near future. Smaller businesses are particularly vulnerable, feeling the adverse effects of tariffs more acutely than larger retailers.

The ongoing trade conflict has broader implications for the economy, especially considering that the trade industry in Southern California supports nearly 2 million jobs and contributes close to $300 billion to the local economy. As logistics and supply chain disruptions continue, there are concerns about future price increases and reduced product availability for U.S. consumers. Without adjustments to existing policies, consumers and manufacturers alike may face challenging decisions in the months ahead.

Historical Context

The origin of current issues can be traced back to January 2025 when tariffs were first announced, prompting suppliers to quickly ship products in anticipation of increased fees. This rush led to a peak in TEU volumes that were eventually followed by a sharp decline of 15,000 TEUs, marking the end of what has been referred to as the “beat the tariff” rush. As a result, TEU volumes have since fallen to approximately two-thirds of prior peaks, showcasing the lasting impacts of the initial trade policy implementations.

In conclusion, the decline in eastbound container volume from Southern California serves as a litmus test for the effects of the U.S.-China trade war, with traders, retailers, and the local economy now bracing for its continuing ramifications.