President Trump’s tariffs have sparked fears that US economic growth could slow materially in 2025. At this point, this sentiment has largely shown up in weak survey data, but one other indicator is already flashing warning signs.
Incoming shipments to the Port of Los Angeles are expected to be roughly 36% lower than the previous year in the week ending May 10.
The port is a key location for imports from China. Economists believe the pullback in expected shipping container arrivals is likely an early a sign of slowing trade activity between the US and China as Trump’s 145% tariff rate on China weighs on trade. It could also be an early sign of slowing economic growth to come.
Bank of America senior US economist Aditya Bhave wrote in a note to clients that the expected fall in shipment arrivals at the port over the next few weeks shows the likely end of businesses and consumers “front loading” tariffs and the start of a “broader pullback” in China trade.
While other key indicators of an economic slowdown, like weekly filings for unemployment benefits, haven’t ticked up yet, RSM chief economist Joe Brusuelas told Yahoo Finance he’s been watching the activity at the Port of Los Angeles. Brusuelas noted that the decline in activity is one of the first signs that US economic growth is set to cool.
“In June, what that means is there’ll be less goods on the shelves.” Brusuelas said. “Less goods equals higher prices. At a time when inflation goes up, that means less disposable income, less demand.”
The key question in the economic narrative has been when downbeat sentiment data from consumers and businesses could show up in actual growth data. Slower shipping rates is one reason EY chief economist Gregory Daco told Yahoo Finance he expects data to reflect weaker economic activity in the coming months.
“We’re seeing cancelation in different ocean lines,” Daco said. “We’re seeing essentially a pullback in orders that are already being seen as of mid April. So I would anticipate that we’ll see that in the [economic growth] data over the next couple of months.”
Broadly, economists are still debating just how much US economic growth will slow this year as the higher costs of goods from tariffs are expected to weigh on consumer spending. In a research note on Monday, JPMorgan Asset Management chief global strategist David Kelly wrote that without a quick resolution to the trade war, imports, exports and inventories all look set to fall sharply.”
