US-China Trade Confrontation Disrupts Global Shipping Routes

(MENAFN- The Arabian Post)

A sharp decline in container traffic from China to the United States has emerged, as the latest round of tariffs imposed by the Trump administration triggers significant shifts in global trade flows. Shipping data and industry reports indicate a substantial drop in U.S. imports from China, with container bookings falling by approximately one-third since early April, according to Hapag-Lloyd, the world's fifth-largest container-ship operator.

The downturn follows the White House's implementation of a 145% tariff on Chinese goods, a move that has prompted retaliatory measures from Beijing, including a 125% tariff on U.S. imports. These escalating trade tensions have led to a significant reduction in scheduled vessels from China to the United States, with a reported 33% year-over-year decline for the week ending May 10.

Major U.S. ports, particularly Los Angeles and Long Beach, are experiencing notable decreases in import volumes. Port Optimizer, a daily ship tracking system, recorded a 29% decline in freight vessels departing China for Southern California for the week ending May 3. This reduction in maritime traffic is mirrored by a broader contraction in global container shipping volume, projected to fall by 1% due to the current trade policies, marking only the third such drop since 1979.

The impact of these tariffs extends beyond shipping, affecting various sectors of the U.S. economy. Retailers and manufacturers, including Walmart, Target, and Home Depot, have warned of potential price increases and product shortages, particularly in industries heavily reliant on Chinese imports such as toys, electronics, clothing, and pharmaceuticals. These companies had previously stockpiled goods in anticipation of the tariffs, but the sustained trade barriers are now leading to supply chain disruptions reminiscent of pandemic-era shortages.

See also Washington Weighs Steep Tariff Hikes on Chinese Imports Amid Escalating Trade Tensions

In response to the declining demand, container lines are adjusting their operations. The OCEAN Alliance, comprising China COSCO, Evergreen, CMA CGM, and OOCL, has reduced capacity on transpacific services, while THE Alliance, including Hapag-Lloyd, Ocean Network Express, and YangMing, has ended certain services and downsized others. Additionally, the 2M alliance, consisting of Maersk and MSC, has consolidated Asia-East Coast services with Israeli line ZIM to manage the risk associated with the U.S.-China trade war.

The trucking industry in the United States is also feeling the effects of the trade slowdown. While there has been a temporary surge in shipments due to businesses stockpiling goods, experts predict flat volume growth and minimal rate hikes through 2025. Transportation stocks have suffered significant declines, and key economic indicators such as U.S. manufacturing and housing permits have weakened, signaling a challenging road ahead for the sector.

China, meanwhile, is preparing for a prolonged economic conflict with the United States. Despite President Trump's softened rhetoric on the trade war, Beijing remains resolute, cutting back on U.S. imports and pausing some exports. The Chinese government is mobilizing national unity around a strategy of economic self-reliance and resistance against what it frames as American“bullying.” China is also leveraging its dominance in rare-earth minerals as a strategic tool, potentially impacting U.S. manufacturing and technology sectors.

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