This uncertainty will hurt trade and the economy in general, even if the United States eventually lifts the strictest measures. Ships that did not sail on time will either arrive with a significant delay, or will not arrive at all. Stocks will run out. Many businesses will have frozen investment and employment plans, and restarting them will not be an easy task.”
The reasons why the effects of Donald Trump’s aggressive tariff policy have not yet been fully reflected in US economic indicators, explains today’s Economist article. According to the publication, although the blow is not yet visible, the “storm” caused by the US in global trade may be dangerously approaching its shores.
“Five years ago, when the pandemic paralyzed the global economy, economists turned to new tools – such as mobility data and restaurant reservations – to track developments in real time. Today, as the world struggles to assess the impact of Donald Trump’s aggressive new tariffs on Chinese imports, analysts are once again using innovative methods. Early findings suggest that the world’s largest economy has not yet suffered a serious blow. But trouble is coming,” the publication says. And it continues: Even before most of the tariffs were imposed, on April 9, surveys recorded the concern of consumers and businesses in the US. According to a survey by the Federal Reserve Bank of Dallas, industrial production hit a record low in April. But such statistics can be misleading: Americans tend to view the economy through the prism of their political beliefs.
During the Biden presidency, many declared themselves pessimists but continued to consume, a fact that calls into question the value of confidence indicators. On the other hand, so-called “hard indicators,” such as wages and GDP, reflect an economic reality that has already passed. The positive employment figures in March reflect the behavior of businesses before Trump’s tariff threats took concrete shape. Real-time data helps avoid both of these pitfalls by providing a more immediate picture of economic activity. Many pandemic-era indicators are now outdated or no longer published. However, global trade is still closely monitored: cargo ships begin recording weeks before their arrival, transmitting position signals via satellite and providing detailed lists of the goods they are carrying.”
Some of the data suggests that the impact of the trade conflict is limited so far. In the week ending April 25, ten cargo ships, carrying 555.000 tons of goods, docked at the ports of Los Angeles and Long Beach, the main gateways for Chinese goods to the U.S. The volume was similar to last year. But the trip from China to the U.S. West Coast can take anywhere from two weeks to 2 days, meaning many of the ships arriving now had sailed before the tariffs went into effect.
Other indicators are more worrisome. According to data firm Vizion, bookings for new voyages between China and the US fell 45% year-on-year in the week beginning April 14. At the same time, the number of empty voyages (when a ship skips a port or a company has fewer ships on an itinerary) now accounts for 40% of all scheduled voyages. Price data suggests that trade flows are being reshaped. The cost of a trip between Shanghai and Los Angeles fell by about $1000 last month, according to Freightos, a logistics company, as companies switched from “pre-fixed” tariffs, importing more than usual to meet the implementation deadline, to avoiding them. The price of shipping goods from Vietnam to America rose by a similar amount, suggesting that importers are looking for alternative suppliers.
“Could any of these ‘bells and whistles’ be misleading? Shipping data is volatile and seasonal: for example, the 30% year-on-year decline in bookings to Los Angeles falls within normal weekly fluctuations. In smaller ports, such as Seattle, only one ship arrives each day. It is not uncommon for several days to go by without any ships arriving.
Moreover, even widely used high-frequency indicators do not point to a stagnation of the economy. According to Barclays, credit card spending and job openings in the US were at similar levels in April to the same month in 2024. But the blow may be coming. The effects of trade shocks take time to appear in the economy: many companies will have had time to build up inventories before the tariffs take effect. Demand for warehouses near ports, where goods are stored and duties are paid only after they are released, has increased significantly. Many businesses are choosing not to raise prices, although theoretically they should, either because they are bound by prior contracts or because they want to maintain good relations with their customers, in case Trump withdraws,” the publication says.
As Peter Sand of consulting firm Xeneta points out, the uncertainty caused by Trump’s unpredictable tariff policy has caught many shipping companies by surprise, despite the experience they have gained over the last decade in dealing with successive crises: from the pandemic and the Suez Canal blockade, to Houthi attacks in the Red Sea.
“This uncertainty will hurt trade and the economy in general, even if the United States eventually lifts the strictest measures. Ships that did not sail on time will either arrive with a significant delay, or not at all. Stocks will run out. Many businesses will have frozen investment and employment plans, and restarting them will not be an easy task. The US may not have been hit yet by the trade storm it has caused, but the prognosis is far from favorable,” the Economist concludes.
