International trade has faced three stark inflection points this century: the Great Recession, the pandemic and the disruptions created by widespread tariff uncertainty and shifting trade policies. What marks the current moment as different is, whereas the prior two cycles were byproducts of economic distress, this latest disruption is designed to reorder global commerce — yet not in a necessarily negative way.
The initial effects of the “Liberation Day” tariff policies announced in April seemed dire. On one day in May, zero vessels left China with goods for ports in the San Pedro Bay complex in Southern California. Six days before, 41 vessels were scheduled to depart. How would the shipping industry weather the storm?
It turned out quite well, at least in the short term. The supply chain has proved resilient in navigating unprecedented uncertainty triggered by on-again, off-again tariffs.
Throughout the year, new trade policies were announced and implemented. Adapting to the moment, industry players set aside their best practices of scrutinizing economic forecasts and making long-term planning decisions and instead focused on building, maintaining and operating their own link of the supply chain while leaders of the world’s top economies negotiated issues far beyond the control of port authorities and private companies.
The unpredictability of the tariffs has resulted in importers and exporters moving goods out of season to avoid potentially harsher levies in the near future — and high cargo volumes at many US ports, including at the Port of Long Beach.
The longer-term effects of these tariffs are to be determined. But we know these types of actions are not sustainable, and businesses need certainty to prosper. We also know that new tariffs and additional fees tend to increase prices for consumers and shrink markets for producers.
Going forward, let’s hope for a return to stability.