All Quiet On The Western Ports... Is This The Calm Before The Trade War Storm?

[Conservative Angle]

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All Quiet On The Western Ports... Is This The Calm Before The Trade War Storm?

All is quiet on the American front as the week comes to a close, even as Korea JoongAng Daily reports that a high-ranking Chinese trade official from the Ministry of Finance was spotted at the U.S. Treasury Department headquarters in Washington, D.C. earlier today. The meeting between Chinese and U.S. officials comes on the eve of a trade war shock now ripping across the Pacific, with the Port of Los Angeles set to be the first hit. High-frequency data suggests the impact will begin at some point next week and intensify with each passing week.

On the eve of a trade war shock, data from Port Optimizer—a tracking system used by vessel operators—shows that scheduled import volumes into the Port of Los Angeles are set to begin plunging next week and could collapse by mid-month.

Goldman analyst Jacob Malmstrom has a few charts for us to end the week:

Geopolitical tensions easing leading markets higher for the week but where the effective tariff rate currently is the highest it's been in 100 years.



With globalisation the trade growth has grown substantially in the last 60 year but looking at current U.S. imports from Europe they have hovered around 15% in recent decades.



World trade growth has increased dramatically in the period of globalisation

In markets, Malmstrom warned:

Difficult to come up with a fundamental bull-case from here longer term. Still need to see any of these four conditions met for a sustainable recovery: 1) Attractive valuations ,2) Extreme positioning easing, 3) Policy Support, 4) Sense that the second derivative of growth is improving. When looking at valuations in the U.S. they look more justified when comparing to ROE. Banks sold-off in the beginning of the year but has rebounded whereas Mega-cap tech has continued its decline. Finally earnings so far has been in-line with the historical average.

Our coverage details the events that have unfolded this month in trigger the trade war shock—one that's already hitting China and is now set to wash ashore momentarily in the U.S.:

• 
  Amazon Cancels Orders, Walmart Pulls Forecast As Tariffs Take Hold
  
• 
  Are China Road Traffic Indicators Set To Collapse As Tariff War Cancels Factory Orders
  
• 
  Chinese Sellers On Amazon Panic After Trump's Tariff Bazooka
  
• 
  Liberation Day Fallout: China's Port Volumes Sink After Trump's Tariff Blitz
  
• 
  Chinese Plastics Factories Face Mass Closure As U.S. Ethane Supply Evaporates
  
• 
  "Our Export Orders Disappeared": Chinese Factories Shutting Down, Laying Off Workers, FT Finds
  
• 
  First Tariff Shock Set To Hit Port Of Los Angeles, With Ripple Effects Across The Broader Economy
  
• 
  Walmart Opens Channel For Battered Chinese Exporters To "Quickly Expand" In Domestic Market
  
• 
  Trade War Shock Looms For Port Of Los Angeles As Goldman Identifies Most-Impacted Products
  

High-frequency data from the Port of Los Angeles suggests a substantial impact on Chinese exports to the U.S. will begin next week, mainly due to the lag between factory shutdowns or halted shipments in China—triggered by the 145% tariffs—and the time it takes for containerized freight to cross the Pacific on massive cargo ships.

The bulleted list above outlines what might come next: downward pressure across the trucking industry in Southern California and the Empire Inland warehouse district. As Goldman noted earlier, inventories for many companies are in the 2–3 month range but could be depleted quickly if panic buying sets in once consumers become aware of Port of Los Angeles disruptions. There could even be a short-term spike in inflation this summer, though it would likely prove transitory.

Tyler Durden
Fri, 04/25/2025 - 23:34

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