Trade in your Big Ships for a Little Junk from China
David Haggith

That is all you need now that trade volumes just fell off the edge of the world where "thar be dragons"--Chinese dragons.

Tariff news out of Trump’s mouth was not what stocks wanted to hear, so their nonsense rally ended today.

Stocks slipped Tuesday after President Donald Trump’s shaky commentary on global trade deals, dashing hopes that progress will soon be made on the tariff front….

Stocks wavered after Trump met with Canadian Prime Minister Mark Carney on Tuesday afternoon, marking the start of negotiations between the two leaders since since Carney assumed office earlier this year.

Trump during the meeting walked back on promises that trade deals are on the horizon, saying, “We don’t have to sign deals.” His statement contradicts Treasury Secretary Scott Bessent’s comments earlier this week. Bessent told CNBC on Monday that “we’re very close to some deals,” echoing comments Trump made himself on Sunday that agreements could come as early as this week.

Those earlier comments were all hot air, and even stronger proof of that came today when Bessent told congress what “very close to some deals” actually means:

“Approximately 97 or 98% of our trade deficit is with 15 countries. Eighteen percent of the countries are our major trading partners. And I would be surprised that if we don’t have more than 80 or 90% of those wrapped up by the end of the year, and that may be much sooner that.”

So, by the end of the year, we can hope to have a deal with 80-90% of the eighteen percent of nations that matter most. They are fooling themselves and everyone else if they think they have that long.

Today’s ports almost look like ghost towns

Proof of that arrived at the ports today, and the proof is already more stark than all the warnings I’ve put out. The first ships to leave China since Trump imposed 145% tariffs arrived today, and, boy, did they ever not deliver the goods. Early estimates were that we’d see shipping from China down by about 30% in the first week of ships arriving under the new tariff regime and then hitting 40% or more in the following week.

The drop-off in imports from China on the boats now coming into port is more than 50%, Seroka said. Many importers have canceled previous orders because US businesses aren’t interested in paying the steep tariff, which can more than double the price of Chinese goods.

The Port of LA had expected 80 ships to arrive in May, but 20% of those have been canceled, Seroka said. Customers have already canceled 13 sailings for June.

“And you still don’t know how long this is going to last,” Seroka warned. “Retailers and importers alike are telling me that the products now cost about two and a half times more than they did just last month….”

Rather than import goods to the United States, some retailers are choosing to pay to store their products in Chinese warehouses because it’s cheaper than paying the tariff, according to Ryan Petersen, CEO of Flexport, a logistics and freight forwarding broker. With importers and retailers unwilling to pay the steep cost, deliveries could continue to fall – as much as 60%, said Petersen. Consumers will start to notice very soon.

And, as if reiterating what I’ve said in terms of timing …

“It’s only a matter of time before they sell through existing inventory, and then you’ll see shortages. And that’s when you see price hikes….”

“If this goes on for a few more weeks, (retailers will) sell through that inventory and by the summertime, you’ll have shortages and empty shelves,” Petersen told CNN last week.

It is just a matter of the amount of time it takes each item that failed to come in to run out of stock in existing inventory that was bought at pre-tariff costs. I’ve been forecasting you’ll start to see the shortages by summer and will start to feel the pinch in prices then, too. Obviously, inventory won’t run out for everything at the same time. Some items will run out well before summer. Others may last all the way through summer, but the start of summer is about when it will all become readily apparent.

JPMorgan is expecting a 70-80% drop-off in imports from China, which is our largest supplier of goods.

“So if you’re looking for a certain type of pants, you may find all kinds of pants, but not the type you want. And the type you want….are going to be priced up,” said Seroka.

There has also been a little delay in this hitting the economy for the singular reason I’ve been giving, which almost certainly helped keep GDP from receding deeper than it already did:

“Businesses spent Q1 front-loading orders for consumer and capital goods (among other things) ahead of Liberation Day on April 2,” noted Daniel Vielhaber, economist at Nationwide, in a note to clients Tuesday. “However, with the new tariffs now in place, we look for a shift up in inflation, adding a headwind to already slowing consumer activity and economic growth.”

And, still, GDP managed to tag the recession end-zone in the first quarter.

Despite the swell of new tariffs in April, economists anticipate the surge in imports to continue for at least a few more weeks as the last few shipments that were on the water before Trump’s “Liberation Day” tariffs were announced arrive into port.

“Goods will enter the country duty free if they were loaded on a ship at the port of departure or in route to the US ahead of the tariff imposition date and are received before May 27,” Wells Fargo economists wrote in a note to investors Tuesday. “This gives businesses a bit more time to get product in ahead of tariffs and suggests we may see a last-ditch effort in the April data. But beyond that we expect trade to slow materially.”

Exports are being deported

Oh, but the news was worse than all of that—all of which completely contradicted everything the entirety of Team Trump have been telling you about how tariffs do not cause inflation. (Of course, Trump’s latest solution for those who do feel the pinch of inflation was an indifference to the level of struggle to come that said, “Then let them eat dolls.” I paraphrase only slightly to maintain historic tracking with Marie Antoinette.)

Until now, no one has really talked about what the retaliatory tariffs charged on US products is doing to shipping of our own factories’ exports, but we got a report on that today, too.

What began as a rapid drop in U.S. imports as shippers cut orders from manufacturing partners around the world has now extended into a nationwide export slump, with the U.S. agricultural sector and top farm products including soybeans, corn and beef taking the hardest hit….

Exactly where I said we would quickly be feeling this—a gut-punch to the farmers who supported Trump.

An exports slide that began in early 2025 has reached most ports across the U.S. and nearly all export market products as the trade impact of President Donald Trump’s tariffs worsens, with agriculture the hardest hit….

The Port of Portland, Oregon, tops the list with a 51% decrease in exports, while the Port of Tacoma, Washington, a large agricultural export port, has seen a 28% decrease. Tacoma’s top destinations for corn, soybeans and other ag exports include Japan, China and South Korea….

What is clear, according to Ben Tracy, vice president of strategic business development at Vizion, “is that nearly all of U.S. exports have taken a hit.”

Of course, you can be sure businesses in other nations were front-running their own nation’s retaliatory tariffs, too, so this will only get worse rapidly as the opportunity to front-run anything is already over. Now we (and they) are just waiting for the tariff results to hit inventories.

With tariffs driving costs higher, small businesses are pausing orders. Products that once moved reliably are now twice as expensive, forcing importers into tough decisions,” he said.

“Buy now” you know what you need to know

That’s why you read here—to get the warning to do your own front-running in the very short window available. There is still time for that on the consumer side (not on the business purchasing end because all those ships have sailed, literally; but consumers have a little more time before the gaps work their way through inventory and leave you empty-handed on some items and with higher prices on others that remain available as more demand shifts to those alternatives when people start seeing the shortages and price increases and changing their buying habits to other foods, other clothing brands, etc. Soon they’ll be making junkets to thrift stores to find what they need among the used items.)

Retailers have been urging consumers to buy sooner rather than later, and data from Bank of America Global Research suggests why that may be the right move. Its latest forecast shows that the number of inbound container ships to the Port of Los Angeles will see a sharp drop in May, with escalating trade disruptions leading to a 15%-20% decrease in U.S. container imports from Asia in the coming weeks.

That drop is in addition to the drop already realized, which should take us to the point where those Asian imports arriving at US ports are down by more than 60%. That means, even if prices seem higher now than you want to pay, you may be better off biting the bullet because they will be higher still in just a little while. The timeline could even be a little shorter than anticipated because inventories are down more than usual already due to the front-running.

Many retailers only have one to two months of sales in inventory, it found, and any unforeseen demand or supply disruptions can quickly impact what goods retailers can offer and the prices charged, it concluded.

Prices may even start to rise before summer because some retailers are talking about trying to slow the rate at which they go through their short inventory so they continue to have something to sell, and the way you do that is by either placing limits on how much people can purchase … or starting the price increases even on products that you did not have to pay a tariff on because of when you ordered them. Let higher prices slow demand.

You read here to get “the news before it happens.” Now we are at the place where it is actually happening, but you still have some time to stock up before it gets really bad. Worst-case scenario: You bought only goods you love to get, if you took the advice given here of buying double (or more depending on your cash flow and ability to transport) of everything you normally buy that has a long shell life; therefore, you will have to buy a lot less when prices are higher.

Hopefully, no one here listened to the baldfaced lies I red-flagged from the likes of Peter Navarro & Co. Don’t shoot the messenger. I’ve only been trying to help, regardless of whatever extent that causes me to lose paying subscribers who think I shouldn’t be so harsh on President Trump. I bank on an antiquated belief that borders on fantasy that, in the end, truth gets honored.

If you’re in the retail business, you, of course, need to heed the warnings a little differently, but you probably already know that (being in the business):

“Retailers that lock capacity now [they’re speaking about on purchases for the holiday season], especially in fast‑moving sectors like toys, consumer electronics, and fashion, give themselves the runway to fine‑tune assortments later without racing the clock,” said Tim Robertson, CEO of DHL Global Forwarding. “It isn’t about pushing extra volume; it’s about sequencing the flow — balancing ocean, air and intermodal options, building buffers for labor or weather‑related surprises, and using real‑time data to pivot if demand shifts,” he said. “The brands that treat June as a strategic deadline, rather than a last‑minute scramble, will be the ones filling shelves, not chasing them when consumers start shopping in November,” he added.

That is harder to navigate, though, because …

Capt. Kipling Louttit, executive director of the Marine Exchange of Southern California, warned in a recent statement that the decrease in vessel arrivals and lighter container volumes coming to the U.S. will translate into excess capacity of labor, trucks, trains and others in supply chain who “will be out of work because of the decline in cargo arrivals.”

Some shipping businesses, in other words, MIGHT actually offer reduced shipping rates just to keep their employees or contractors employed. Many, however, are running less efficiently with smaller volumes on smaller ships, so price are up. But you don’t know which way shipping will tilt in your own case. The fact that others will lay people off means that, even with fewer items being transported, it may be risky to gamble on anyone keeping their shipping prices down in order to get the limited number of loads available.

Still, here is how that works:

Matson, which offers an expedited service from China to Long Beach, California, reported that since the tariffs were implemented in April, container volume for the company has declined approximately 30% year over year.

“Coupled with limited visibility to our container demand, we expect container volume and average rates in the second quarter to be lower year over year,” said Matt Cox, Matson CEO, on its earnings call. “At the moment, it’s difficult to know if these lower volume levels are transitory or will persist for a longer time in 2025 and the duration of this lower demand period will likely depend on active negotiations taking place across the supply chain, and the timing of potential amendments to the tariffs,” he said.

I’d hate to be in a business having to divine these kinds of decisions right now.

Trading places

Ah, but there was good new on trade negotiations; it just wasn’t good for Trump. While nations are not rushing to make deals with Team Trump, some places are rushing to make deals with other friendlier places. So, the UK and India today signed a landmark trade treaty that each side hopes will eventually lead to completely free trade.

The deal will see India gradually lower import taxes, with the vast majority of goods traded becoming “fully tariff-free within a decade.”

The U.K. government said the agreement is expected to increase bilateral trade by £25.5 billion ($34 billion)

That would be about a 60% increase in trade between those nations to offset some lost trade with the US. Other nations are taking a little of our market share, which might be for good once they no longer see us as reliable trading partners.

For Team Trump, where the big guy are in the US met with the new big guy from Canada today, the news was a definitive statement from Premier Carney that Canada is not and never will be up for sale. To which Trump essentially replied, “We’ll have to wait and see.” So, there wasn’t much breaking of the polar ice there, though Canada was very friendly … of course.

Trump also said, along the lines of his “Let them eat dolls” approach, “We don’t need anything they have anyway. They need us.”

Canadian Prime Minister Mark Carney told President Donald Trump on Tuesday that his country will never be for sale, shutting down the U.S. president’s repeated calls to make Canada the 51st state.

“There are some places that are never for sale,” Carney said in the Oval Office.

Canada is “not for sale” and “won’t be for sale ever,” the prime minister said.

Trump replied: “Never say never.”

Well, that’s working out really well for you so far, President Trump.

Trump also expressed impatience with those asking him about the status of trade deals that his administration says are taking shape in private with numerous countries.

Of course. They’re asking, “Where’s the beef?”

“Everyone says, ‘When, when, when are you going to sign deals?’ We don’t have to sign deals,” Trump said. “They have to sign deals with us. They want a piece of our market. We don’t want a piece of their market.”

That sounds like what you start to say when you still have no deals in hand and few prospects.

Well, we DO have to sign deals if we’d like to eat this winter and have clothes to wear. We won’t starve, of course, because we produce enough to feed ourselves, but there will be lots of items we produce very little of but consume great amounts of, such as chocolate or coffee or tea that could look really, really skinny on the shelves. And we are not known for making fabrics anymore. We produce far less than what it takes to clothe ourselves. So, the idea that we don’t need anyone else is arrogantly naive about how dependent we’ve let ourselves become and about the fact that some things can’t grow here or come out of the ground here.

“Time will tell,” Trump added. “It’s only time. But I say, never say never.”

Carney later made his stance even clearer. “Respectfully, Canadians’ view on this is not going to change on the 51st state,” he said.

So, if that is what we are waiting for from Canada in order to strike a deal, it will be a long cold winter with nothing coming down from Canada. And, while Trump says we don’t need them, they do sell us more than maple syrup and moose meat. We get a lot of lumber from Canada and other major resources. While we can “drill, Baby, drill,” tighter supply almost certainly means higher prices, which will particularly hit builders because, even if you don’t buy materials that come from Canada, the lack of supply from Canada drives up the prices of material from other places because those places now find their supply overstretched, so they price up to the market.

“We don’t need their Cars, we don’t need their Energy, we don’t need their Lumber, we don’t need ANYTHING they have, other than their friendship, which hopefully we will always maintain,” Trump wrote in the post.

Not acting like this you won’t.

The unfriendly welcome for Carney came one day after Trump downplayed expectations for the meeting.

“He’s coming to see me. I’m not sure what he wants to see me about, but I guess he wants to make a deal. Everybody does,” Trump said Monday in response to a question about Carney’s visit.

Sure. That’s why we may see a few of those deals by the end of the year.

U.S. Commerce Secretary Howard Lutnick painted Canada as little more than an economic leech on the United States.

“They have been basically feeding off of us for decades upon decades upon decades,” Lutnick said in a Fox Business interview, the day before Carney’s visit. “They have their socialist regime, and it’s basically feeding off of America.”

Yeah, talk like that from your team will preserve that friendship! That is how Team Trump refers to a trade deficit where we buy more from them because we NEED more than them or WANT more and have the money to get it. That is “leaching off of us.”

“We hope things will remain friendly.” Well, not like that, they won’t!

What realm do these people live in?

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