Freighters in Del Aire. Importers in Van Nuys. A brake shop in East Long Beach.
Businesses in and around Long Beach say they have begun to feel the damage from the trade war between the U.S. and China that kicked off with an intense ratcheting up of tariffs last month. Despite news Monday that the two sides agreed to a temporary truce, officials and laymen expect to see damage play out across nearly every sector of the national supply chain.
“Let’s be clear, what we need is certainty,” Long Beach Mayor Rex Richardson said Monday. “There still will be a great deal of uncertainty for (our) workforce and for buyers and suppliers. So we’re not going to celebrate right now that the crisis is over. This is still a crisis of our own making that we need to address through long-term, long-range, strategic and stable policy making.”
The 90-day truce, starting Wednesday, will see the United States lower tariffs on Chinese imports from 145% to a minimum tax of 30%. China will lower its import duty on American goods to 10%, down from 125%.
While the news was well-received by U.S. financial markets, it only made it more clear to officials at the Port of Long Beach just how pivotal a role it plays in the global economy.
About 40% of U.S. goods move through the Port, contributing an estimated $300 billion to the national gross domestic product. It is consequential to more than a million jobs statewide and about 2.7 million jobs nationwide. It also brings about $84.5 billion in tax revenue to the region, according to an impact report Long Beach officials unveiled Monday.
“The reality is these tariffs on imports from China are already showing real-world consequences, and nowhere is that more visible than right here in the city of Long Beach, at the Port of Long Beach,” Richardson said.
As tariffs kicked in starting the week of April 27, Long Beach saw vessels arriving at the Port with goods subject to the 145% tax. And the following Friday, May 9, reports found that for a 12-hour period, there were zero vessels bound for the U.S. from China, Port CEO Mario Cordero said.
“The ports in China are essentially twenty-four-seven, so to have a twelve-hour period where there’s no vessel departing from any Chinese port to the USA, that should be concerning,” Cordero said.
Officials say they now expect a 30% drop in imports at the Port of Long Beach in May, amid canceled ships — 60 cancellations worth about 150,000 containers — through June. It’s a swift reversal for what was the busiest Port in the nation last month, and it has already led to reduced hours for workers and expected shortages at storefronts.
Gary Herrera, president of Local 13 of the International Longshore and Warehouse Union, said the Port’s 6,000-odd part-time workers are being “forced to find other jobs” as all their hours have been pulled.
“There are absolutely zero work opportunities for them,” Herrera said.
In the wake of Monday’s truce, importers were left scrambling to figure out what the deal would mean and how much port traffic would bounce back.
Maria John’s business imports primarily electronics — fridges, TVs, vacuums — for big-box retailers like Walmart and Sam’s Club. Those types of goods make up a large portion of incoming goods to Long Beach, which brings in a fifth of all refrigerators, computers and smartphones, as well as 30% of microwaves and 80% of televisions, according to Cordero.
John said her shipments have largely stalled. Last May, John said she imported 100 containers. This month, she’s brought in two, both of which now sit in a bonded warehouse, which temporarily shields goods from import duties, while she figures out how much she owes to clear them through brokerage.
Tariff prices change by the product, she said, as well as their specifications: TVs at a certain size, washers that use a certain amount of electricity.
Asked Monday about the Trump Administration’s deal with China, she responded with some muted relief, and a lot of questions. Like, how much money does she now have to pay? She used a music speaker as an example, a difference she said of paying $108 versus $276.48.
“If I take these (containers) out, what does that mean?” she asked. “Does that mean I’m paying 30% now instead of 156%? What exactly does that mean? There’s so many stipulations, so many rules. … It all falls on the importer to pay (for) it.”
Vincent Iacopella with Alba Wheels Up International, a freighting company with an office in Del Aire, said he expects a rally in incoming goods similar to the start of the year, when Long Beach broke records as the busiest port in the nation, thanks to shippers trying to avoid looming tariff increases.
Pointing out the short transit time between ports in China and Southeast Asia to Long Beach — at least 17 days — Iacopella said he expects a quick pivot to the city’s benefit.
“My customers are importers and exporters,” Iacopella said. “We’ve already seen a huge demand even before the news, just on whispers of the news last week.”
Some importers like John are scrambling to secure bonded warehouse space, which lets shippers bring goods ashore and shelter them from duties until removing them from storage.
Weston LaBar, the Chief Strategy Officer for Waterfront Logistics, said he’s seen a spike in demand, but the tariff uncertainty is even a struggle for him. Their big fear, he said, is going through the process of obtaining permits for bonded warehouses, only for the demand to drop overnight.
“If we permit our facility to be bonded, and there’s no bonded cargo, not only did we miss out on helping the shippers coming into the nation that are trying to navigate the trade war, but then we have a whole bunch of space that we can’t use once it’s been bonded,” he said.
When asked to forecast the months ahead, Tracy Hernandez with the Los Angeles County Business Federation — which represents 245 business associations and 400,000 employers — said many larger companies may now rush to get goods onto ships in the 90-day period, leading to bottlenecks and increased shipping costs.
In an annual poll conducted by the federation, the number of employers listing “uncertainty” as a primary concern is the highest it’s been in 16 years, she said.
How businesses will react depends on their size — more or less than 50 people — to include how much cash they have on hand, lenders willing to let them borrow and their overall “desire to compete.”
“Some people will move and act (quickly), and there will be a lot of volume that will be able to take place in that (time),” she said. “But it kind of depends. We’re made up of a lot of mid-size and small businesses in California, which is our backbone. … When you’re mid-sized and smaller, your relationship with cash to make purchases is more complicated and oftentimes adds more time.”
For smaller businesses, Hernandez said, it’s more difficult to react that quickly, with less cash or access to lenders to make that gamble.
Local businesses that normally have nothing to do with shipping are also having to adjust. Kevin Kemp, who runs a brake shop in East Long Beach, has considered trying to stockpile inventory, but, “It’s really not possible, he said.
“Brake pads, rotors, especially rotors, they take up a lot of space,” he continued. “They’re very heavy. You can’t just throw them on the shelf somewhere.”
Typically, Kemp said he requests parts as he needs them, from local suppliers who usually deliver them in 30 minutes. Yet in the past two weeks, one phone call for a part has become a four- or five-hour search, even for routine parts.
There is also the cost; a 20% jump “across the board” in the past few weeks as suppliers — previously ordering from China and Mexico — are scrambling to reroute parts from different countries.
“I do my best to absorb most of that,” said Kemp. “But I think we’re going to be at a point soon where the customers are going to start to experience a bit of it.”