Corine Solberg/Sipa USA via AP Images
Shipping containers are loaded onto a cargo ship at the Port of Los Angeles, April 10, 2025.
As my colleague Bob Kuttner wrote yesterday, Donald Trump, after starting April like a lion, is going out like a lamb. He has said publicly that tariffs on China will “come down substantially,” with an unnamed aide floating rollbacks as high as 65 percent. Treasury Secretary Scott Bessent gave a similar story at a closed-door meeting hosted by JPMorganChase (why was he delivering market-moving information in secret to bankers?), and publicly at the Institute of International Finance on Tuesday. “There is an opportunity for a big deal here” with China, Bessent said, and “if they want to rebalance [their economy], let’s do it together.”
Wall Street is certainly desperate for any note of conciliation, and Trump saying he has “no intention” of firing Federal Reserve chair Jerome Powell made them even more ebullient.
But let’s get real.
The proposed tariff cuts would only come as part of negotiations, not unilaterally. (Stocks fell back on that news.) Even a 65 percent cut would still leave a 50 percent tariff on China, which may not change the trading dynamics that likely forced Trump into proposing the reductions. And businesses have seen tariff rates ping-pong multiple times just this month, making it impossible to plan or invest.
Perhaps most important, China now knows it has a paper tiger across the negotiating table, and can hold out for the best deal. That would be true even if Trump were still ranting on Truth Social every hour about breaking China’s will—because the Chinese can read the news like anyone else. More important, they can see what’s happening at their own ports.
A TERM OF ART IN GLOBAL SHIPPING is “blank sailings.” It refers to canceled voyages, or the skipping of ports along a route. Since the tariffs were initially announced on April 2, blank sailings, particularly across the Pacific Ocean, have increased more than sixfold, from 60,000 twenty-foot equivalent units (TEUs, a standard measurement of cargo capacity) to 367,800. One of the three major freight alliances has suspended an entire route that stops in several Chinese cities on the way to Vancouver and Tacoma, Washington.
Overall, there’s been a sharp decline in container volume from China to the U.S. at the main ports that take in Chinese goods. One logistics CEO says that bookings have been reduced by 60 percent. Some of this is due to demand that was pulled forward as shippers tried to beat the clock before tariffs were imposed, and some is due to new fees on Chinese ships that took effect last week. But in reality, 145 percent tariffs are effectively an embargo.
Incoming vessels at the Port of Los Angeles, the nation’s largest and the primary hub for Chinese goods, will go down by nearly half in the next two weeks, as shippers transition from beating the tariffs to cold reality. Yet exports to China are running worse, something that was happening even before the tariff announcement. Empty containers leaving L.A. were up 23 percent in March, with overall bookings running near the level of April 2020, when there was a nationwide lockdown due to the pandemic.
“American companies over-ordered imports ahead of tariffs, but foreign buyers did not increase their demand for American exports,” the website Data and Politics notes. In other words, the trade deficit, far from declining, has been exacerbated by tariff chaos in the first month. And if empties keep getting shipped abroad, exporters might have trouble sourcing containers to carry their goods.
China now knows it has a paper tiger across the negotiating table, and can hold out for the best deal.
Obviously, shipping companies are taking a hit; shares in U.S.-flagged Matson are down 30 percent from the peak. But the overall drop in volume has ripple effects for other businesses dependent on trade, like trucking. Workers making Mack Trucks, a division of Volvo, are being laid off nationwide as expected demand sinks. And companies that put trucks on the road will simply have fewer goods to take across the country.
Manufacturing companies are supposed to benefit from high import barriers, but with their component parts facing levies, conditions are now sharply negative. Even S&P Global’s manufacturing index, which was relatively brighter than others, showed a 16-month low in business activity growth. And import-reliant sectors like housing, which was already on a downswing because the supply pipeline was diminishing, are poised to pause construction to avoid higher costs on materials like Canadian lumber. (This has some developers thrilled because they get to charge higher rents. Yay.)
Many importers are trying to find other manufacturing sources or cutting costs elsewhere. But some are just putting a stop to everything, while waiting to see if deals can be struck. That sudden stop puts enormous pressure on shipping, trucking, warehouses, and everything else that makes the economy function. Those companies don’t have unlimited reserves to avoid bankruptcy while Trump dithers.
But the real impact would be visible not just to trucking and shipping CEOs, but every consumer trying to buy things this summer. It’s not possible to backfill the volume of canceled orders from China and elsewhere in such a short period of time. That means empty shelves. It’s not surprising that this latest turnaround came right after Trump met with top executives at Walmart and Target. Apparently in that meeting, Trump was told that shortages would occur without some action taken. As Walmart’s rise to market dominance has been powered for many decades by its cultivation of and reliance on Chinese imports, this should not have come as a surprise.
The effective embargo would create other shortages in critical components, such as parts for transformers and air conditioners. But Trump thinks in terms of visuals, and the big one is a Walmart with nothing for sale, or a run on thrift stores as new goods are absent. That would be deadly to his approval rating and he knows it.
YOU MIGHT ASK WHY CHINA WOULD have leverage in this situation. Manufacturers in China’s export-driven economy feel the same pain as U.S. retailers if shipping volume craters, after all. But recent events are revealing that China is far more prepared for decoupling from the U.S. than we are for decoupling from them.
For one thing, Chinese companies are sending back big-ticket items like airplanes to American companies rather than pay tariffs (not good news for Boeing). For smaller shipments like soybeans, which are the biggest U.S. export to China, alternative suppliers like Brazil and Argentina have been tapped. Incidentally, during first-term trade wars, Trump was able to use a New Deal–era measure called the Market Facilitation Program to pay off farmers missing out on Chinese sales. But there’s only $4 billion of funding available from that program, former Department of Agriculture official Gbenga Ajilore explained to the Prospect; Congress would have to replenish it to avoid a farming collapse, putting Trump in a weaker position.
Export controls carried over from President Biden have mostly improved Chinese corporate fortunes, particularly in the semiconductor market, where controls on Nvidia chips have given life to Huawei, which is readying mass shipments. Over time, China might find themselves relatively contented by separate trading blocs; at the least, they don’t have nearly the sense of urgency that the U.S. does at the moment.
That’s why you’re seeing the Trump administration frantically announce “deals” with other countries to avert reciprocal tariffs currently under a 90-day pause, and tease this rapprochement with China. The deals aren’t going to be trade agreements, however, but “memorandums of understanding” that will have to get hashed out over years. Europe, for example, seems to have no idea what Trump even wants out of the talks.
But let’s say that everything “works,” that enough concessions are granted so companies feel comfortable trading with the U.S. again. As Flexport’s Ryan Petersen points out, a mass rebooking from the current low level could strain the available resources on the ocean, send shipping rates soaring, create crises with ships and containers in the wrong place at the wrong time, and lead to the exact same dynamics we saw with the supply chain crunches of 2022 and 2023. And that’s a strong possibility under the best-case scenario.
THE SAD IRONY IS THAT THE BIDEN METHOD—targeted tariffs to bolster infant companies in critical sectors with opportunities to grow and solve pressing global challenges—is humming in the background behind the chaos. This week, the Commerce Department announced the conclusion of an anti-dumping investigation initiated three years ago on Chinese-made solar panel components. Four countries found to have illegally transshipped goods from China will face tariffs between 41 and 3,521 percent.
The long timeline and clear signaling had already boosted U.S. solar manufacturing, accompanied by generous subsidies in the Inflation Reduction Act for clean energy. Three years ago, the U.S. was dependent on foreign imports for 90 percent of all solar equipment; today, it’s the world’s third-largest solar module manufacturer, and last year the country produced enough gigawatts of modules to cover all U.S. installation demand.
There isn’t true self-sufficiency yet in U.S. solar, but we’re headed in that direction, forestalling a situation where our dependence on OPEC is traded for our dependence on a Chinese cartel dominating U.S. energy needs. Yet all of this progress is at risk if Trump cancels the IRA subsidies for solar. And his substitute industrial policy, if you can give that name to his tariffs, is risking mass collapse of the logistics sector, weak manufacturing, higher prices, empty store shelves, and an unmasking of America as a thoroughly dispensable nation.
The clumsy rush into universal tariffs with no underlying strategy for reshoring brought us here. The alternative path was just tested in the last administration and was working. Wall Street may enjoy a short-term bounce from Trump’s assurances of no further damage. But sometimes, what’s undone cannot be rebuilt.
