Exploring International Commerce: Perspectives from Gene Seroka, Head of Port of Los Angeles
In the ever-evolving landscape of global trade, the long-term effects of tariffs imposed by the United States on China have left a significant impact on the economy, both domestically and internationally.
The spring and summer fashion seasons, as well as the back-to-school period, are crucial for the economy, and this timeline aligns with the periods that have seen significant import declines from Southeast Asia and China. The uncertainty in global trade persists, and a quick resolution is needed as we navigate these uncertain times.
The tariffs, covering about 71% of US goods imports by value, have led to reduced imports from China. These potential exports have been redirected to other regions such as the Euro area. Retaliatory tariffs further reduced US exports, depressing global trade flows.
Elevated tariffs have caused firms to reconfigure supply chains, shifting sourcing away from China or rearranging production locations. This restructuring has led to inefficiencies and higher costs in global supply chains, making the production networks more fragmented and complex.
The consumer impact has been significant, with tariffs raising US consumer prices by roughly 1.5-1.8% in the short run, translating into an average real income loss of about $2,000 per household in 2025 dollars. This reflects tariffs passed through to consumer prices, thereby lowering consumer welfare.
The long-term economic consequences have been far-reaching. US GDP growth declined by about 0.5 percentage points annually during 2025-2026, with a long-run GDP contraction near 0.4% (roughly $115 billion annually). Payroll employment is estimated to be roughly 500,000 lower by end-2025, and unemployment rates have increased correspondingly.
Manufacturing output has seen modest growth (+2%), but construction and agriculture have declined, showing sectoral disparities. The tariffs have yielded significant federal revenue increases, around $2.3 trillion cumulatively over 2026-2035, net of dynamic effects. However, the negative overall economic effects dampen the tax base, offsetting some revenue gains.
As we look ahead, the situation recalls the concerns about inflation from November. The slowdown in global trade could have long-term effects on the global economy. If a deal is reached, a potential path forward involves repositioning ships, loading containers, and transporting them across the Pacific, which takes about a month.
Staying informed and prepared for the challenges ahead is essential as we navigate these uncertain times in global trade. Gene Seroka's insights reveal that the global economy is at a crossroads, and decisions made in the coming weeks will shape the future of trade and economic stability.
The unpredictability in global trade, as a result of tariffs on China's imports, has led to the reconfiguration of supply chains, causing inefficiencies and higher costs in business logistics. This restructuring has resulted in a more fragmented and complex global supply chain.
The long-lasting impact of these tariffs is vast, as they have caused a decline in US GDP growth, a decrease in payroll employment, and an increase in unemployment rates, especially in sectors like construction and agriculture.
In the face of these challenges, it's crucial for businesses to stay informed and prepare for the future, as decisions made in the coming weeks will shape the trajectory of global trade and economic stability.
