Ports and Businesses Brace for Impact From Heavy Tariffs
Markets reacted negatively on Monday after President Donald Trump's announcement of sweeping tariffs on major trading partners, including an additional 34 percent tariff on China. The Dow fell four percent, the S&P 500 dropped five percent, the Nasdaq was down by six percent, and the small-cap Russell 2000 fell by 6.6 percent - the worst trading day on Wall Street since the COVID-19 pandemic. American seaports and importers are bracing for the effects of a 20 percent tariff on the EU, a cumulative 54 percent tariff on China, and 40 percent-plus tariffs on Southeast Asian nations.
At the twin ports in San Pedro Bay, any decline in trade volume will be acutely felt. More than 60 percent of Port of Long Beach's imports come from China, and at neighboring Port of LA, the Chinese share is about 40 percent. Hundreds of thousands of jobs in the vast warehousing districts around LA - where containers are unstuffed and the contents loaded for delivery around the U.S. - will be directly affected.
"If we have reduced container volume and more specifically imports, be it from China or Southeast Asia, it would have an impact on jobs," said Mario Cordero, CEO of the Port of Long Beach, speaking to CBS.
LA and Long Beach have been booming over the past few months as importers raced to beat the tariff deadline. Port of LA posted its second-best February ever, driven by strong import volume. That boom may be followed by a bust cycle, Port of LA CEO Gene Seroka has cautioned.
"Given the substantial inventory already here and the uncertainty of tariffs, it’s possible we can see a 10% drop in volume in the second half of this year," Seroka said at a press conference in March.
Smaller import-dependent businesses may be the most affected by the new tariffs, and smallcap stocks have now fallen by more than 20 percent since before the election. "They’re not like large corporations. They operate on very thin profit margins," Bank of America Institue economist Taylor Bowley told Politico. "Frankly, they just don’t have the bandwidth or operating expenses to do that."