America’s largest port, the Port of Los Angeles, could see a quarter of its cargo impacted by new tariffs implemented by the Trump administration, with many retailers stocking up ahead of their implementation.
Speaking in an interview with CNBC, Gene Seroka, executive director of the Port of Los Angeles, told the news channel that around 25% of the cargo moving into the port could be subject to the new tariffs. “That would be containers lined up from LA to NY and back,” he said.
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An additional 25% tax on a second wave of goods from China worth US$16bn came into effect on 23 August, with China immediately retaliating with a 25% tax on US goods of the same value. The moves bring the amount levied to a combined $100bn since the first round of tariffs went into effect in July – $50bn from each side.
Meanwhile, Trump has threatened further tariffs on US$200bn of Chinese goods. The tariffs, which China has vowed to retaliate against by levying duties on $60bn of US goods, could take effect by early September.
As a consequence, Seroka believes the uncertainty could impact competitiveness and jobs.
“50% of our nation’s imports are going into the manufacturing stream, and those are the exact companies and jobs that we’re trying to raise the level of competitiveness for,” he explained. “While we fully support making sure these companies are competitive and creating great jobs, we want to get down to business and get some negotiating settlements and move some cargo. Our business doesn’t handle uncertainty very well and everybody is trying to move to get ahead of this curve.”
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By GlobalDataDespite the potential impact, the port recorded its best ever July, and the fourth best month ever in its history, handling 833,000 Twenty-Foot Equivalent Units (TEU).
“What we’ve seen is not only our peak season rush, for back-to-school goods, for fall fashion and year-end holidays, but the cargo is moving in with purchase orders being advanced to avoid potential tariffs,” Seroka said.
“The work we’ve done so far in creating the port optimiser with General Electric Transportation, and the way we see goods with a better line of sight and have better planning with our service providers has allowed us to move more cargo than ever.”
The numbers, however, suggests volumes are moving earlier as shippers, and indeed retailers, look to avoid the tariffs. If this continues, Seroka said there may be concerns over lack of storage space.
“There will be a tipping point at some juncture. In Southern California is the world’s largest warehousing complex – more than 1.8bn sq ft. Right now, the available vacancy is less than 1%. So if more goods start to stack up you’ll see a bottleneck in that area. We’re trying to keep that area of business as fluid as possible but we’ve got to watch it very closely.”
Despite this, Seroka is confident about volumes going forward, but added a warning.
“For the next couple of months, we foresee the volume remaining strong. But I am concerned that if this continues to go on in a protracted fashion, we may see a much lighter fourth-quarter than we’ve been used to.”
