Report: The Effects of Tariffs on American Supply Chains

Good morning and Happy Sunday,

The long-term effects of President Trump’s tariffs won’t be known for a long time: remaking America’s industrial base is a generational task. It will even be months before the final tariff rates are agreed so a great deal of uncertainty remains.

However, what is certain is that supply chains are being disrupted now but this is being overshadowed by the political noise and market watching.

This Bloomberg interview with the CEO of the Port of Los Angeles on Friday is worth 10 minutes of your time. He very clearly lays out where we are right now with respect to imports from China (down ~30%), the downstream effects (significant), and what restarting supply chains looks like (slow).

Assuming that many businesses front-loaded inventories in early April, which increases in import volume support, the rapid drop off in May signals the start of a supply chain black hole that’s going to ripple across the US economy.

Businesses that own their own supply chains should already have a good sense of what this means for them but most businesses are much farther along the supply chain so the effects won’t be as obvious. And because supply restrictions haven’t hit yet, many may think (mistakenly) that they’re not affected.