by Lloyd's List

14 June 2025 (Lloyd's List) - “IT’S very slow here,” conceded Gene Seroka, executive of the Port of Los Angeles, during a press conference on Friday.

“This week has been particularly slow. We do have 12 ships at the port today, which is a good number, but it’s one of the few double-digit ship days we’ve had in weeks.”

Seroka did not sound optimistic that volumes will rebound strongly due to the tariff reprieve announced on May 12.

“I expect overall cargo flow to remain modest for the balance of 2025,” he said, predicting that the port would not be able to match last year’s second-half numbers “unless there’s a significant change to trade policy very soon”.

“For the balance of the summer, we see a little bit of a peak in the month of July. I don’t have a real good outlook on how steep the drop would be after that, but I don’t think we’re going to fall off a cliff, because the American economy is still moving forward, albeit not at the pace we would like.”

LA imports fall 19% in May vs April

The official numbers for May were announced on Friday, and as predicted, they were very weak.

The port handled 355,950 teu in imports, down 19% from April and down 17% versus the five-year average for May. Last month’s imports came in 25% below the level forecasted by the port before tariffs were announced.

Los Angeles’ imports in May were the lowest in any month since April 2023, and were 17% below imports in May 2019, prior to the pandemic.

Negative 14% drag on import volumes predicted

The tariff effect on import costs, which is already significant, will go significantly higher, said economist Ernie Tedeschi, director of economics at The Budget Lab at Yale, a nonpartisan policy research centre.

The announced tariffs have not been fully implemented yet, he explained during the Port of Los Angeles press conference.

He said that the new tariffs announced by US president Donald Trump this year have increased the average US effective tariff rate by 12.1%, to an average of 15.5%, the highest level since 1938 during the Great Depression.

“We can see from the government revenue data that the present tariffs that have been announced are not yet fully enforced. The government revenue is up only about half of what we would expect,” said Tedeschi.

Government tariff revenues of $22bn in May “translate into an average effective tariff rate of 7.5%-8%, and we are expecting 15.5%, so we’re only about halfway to full strength given what’s been announced so far.”

Tedeschi does not expect tariffs to fall from current levels. The risk is that tariff rates will go higher.

“The announcement earlier in the week seems to be cementing in a sort of status quo,” he said, referring to Trump’s declaration that tariffs on China would total 55% (30% added this year on top of 25% previously).

“Never say never — there is non-zero chance that the China rate goes lower, but that’s not my [base] case right now. I think the risk around China tariffs is that they end up higher than they are now because of some trade dispute that erupts.”

Scepticism has emerged on tariff fallout due the lack of significant inflationary effects to date — but that fallout is coming, said Tedeschi.

“It just takes time for the tariffs to flow through into the official data. In January 2018, during the first Trump administration, the US placed tariffs on imported washing machines. We didn’t see an effect on the washing machine CPI [Consumer Price Index] data until April 2018.

“The main reason was that retailers had a large inventory of pre-tariff washing machines that they burned through first. Those were the prices consumers were seeing at first.”

The same pattern will emerge this time around, with US businesses currently working down pre-tariff inventories.

“It will take time” for the full tariff effect to translate into inflation, he said, predicting a total increase in US inflation of 1.5% due to tariffs, spread across three years. He noted that the impacts of the Smoot-Hawley tariffs enacted in 1930 weren’t fully realised until 1933.

Larger US businesses are in much better position to handle tariffs than small and medium-sized businesses, he said. 

“Larger businesses have leverage to negotiate some relief from the tariff cost increase, at least in the short run, whereas small and medium-sized businesses are price takers when it comes to global supply chains and don’t have that leverage. They are going to face the full amount of tariffs and will have to eat it or pass along the full amount.”

To the extent US businesses can’t afford to pay the tariffs, and are unable to pass along the cost to consumers, it will translate into a loss in US import demand, a negative for container lines and ports.

“In our projections, we see import volume demand falling 14% in the medium term, over the next three to five years. The import numbers we’ve seen so far are very consistent with that, and even show that it may be potentially greater in the short run,” said Tedeschi.