Trump’s Tariffs Threaten US Growth as Port of Los Angeles Shipments Plunge
The US economy could be facing a major slowdown in 2025, fueled by President Donald Trump’s aggressive tariff strategy. Although much of the concern has, so far, been limited to soft survey data, new hard evidence suggests storm clouds are gathering.
Incoming shipments to the Port of Los Angeles — a key gateway for imports from China — are expected to plunge nearly 36% year-over-year in the week ending May 10. This sharp decline is raising alarm bells among economists who see it as one of the first tangible signs that Trump’s 145% tariff on Chinese goods is beginning to bite.
Bank of America senior US economist Aditya Bhave noted in a client report that the expected drop in shipments signals more than just a temporary blip. According to Bhave, businesses had been “front-loading” imports ahead of the tariffs, but that phase appears to be ending. Now, the US is likely entering a “broader pullback” in trade activity — a potential harbinger of slower economic growth.
Trade Activity Slumps: An Early Warning for the Economy
Shipping volume at the Port of Los Angeles is a crucial economic indicator. A significant drop in activity there often precedes broader economic slowdowns, particularly when trade relations are strained.
Economists are concerned that the falloff in shipping points to deeper issues. According to Joe Brusuelas, chief economist at RSM, the lack of incoming goods could soon translate into noticeable supply shortages on store shelves by early summer.
“In June, what that means is there’ll be less goods on the shelves,” Brusuelas explained. “Less goods equals higher prices. At a time when inflation is already rising, that means less disposable income for consumers and less demand across the economy.”
This dynamic — reduced supply leading to higher prices — could exacerbate inflationary pressures, compounding the financial strain on households. If consumers cut back spending, it could further slow US economic growth.
Sentiment vs. Reality: When the Slowdown Hits the Data
Until now, much of the anxiety around a potential recession has been driven by surveys and sentiment indicators. Business leaders and consumers have expressed caution, but hard economic data — such as unemployment claims — have remained relatively steady.
However, with shipping volumes collapsing, the first real signs of economic stress are emerging. Gregory Daco, chief economist at EY, told Yahoo Finance that shipping cancellations and order pullbacks had already started as early as mid-April.
“We’re seeing cancellations in different ocean lines,” Daco said. “We’re seeing essentially a pullback in orders that are already being seen as of mid-April. So I would anticipate that we’ll see that in the [economic growth] data over the next couple of months.”
If these patterns continue, the US economy could report notably slower GDP growth by mid-2025.
How Much Will the Economy Slow?
While economists agree the tariffs will weigh on growth, the magnitude remains a matter of debate. In a recent research note, David Kelly, chief global strategist at JPMorgan Asset Management, warned that without a swift resolution to the trade conflict, key sectors like imports, exports, and inventories are poised for sharp declines.
“The combination of reduced trade and elevated costs could act as a double drag on growth,” Kelly wrote.
In other words, unless there’s a breakthrough in US-China relations, American businesses and consumers should brace for tougher times ahead.
What You Can Do
As the economic landscape shifts, experts advise preparing your finances to be more resilient against higher prices and possible job market volatility. Strategies to “tariff-proof” your finances include:
- Diversifying your income streams
- Building a stronger emergency fund
- Reducing discretionary spending
- Locking in fixed rates on major expenses
- Exploring investments that can hedge against inflation
The weeks ahead will be crucial. If shipping activity continues to fall and economic data starts reflecting the slowdown, 2025 could be a far more challenging year for the US economy than many previously expected.