Liberation Day Fallout: China's Port Volumes Sink After Trump's Tariff Blitz

On Monday, we outlined the deepening fallout from the trade war, with U.S. markets wobbling while the Federal Reserve remains sidelined. In response, Treasury Secretary Scott Bessent suggested in an interview that the Treasury may step up buyback operations in a bid to cap soaring yields. Meanwhile, in China, authorities have rolled out a series of market-stabilizing measures to project stability after President Trump's 145% tariffs (now excluding select electronics such as computers, handsets, and semiconductors) are delivering a sharp blow to Chinese suppliers.

Trump's tariff bazooka last week—raising the effective rate on Chinese goods to 145%—sent suppliers in the world's second-largest economy into panic and turmoil, particularly those selling on Amazon, as we noted last Thursday in our piece titled "Chinese Sellers on Amazon Panic After Trump's Tariff Bazooka." 

The hunt was then on for high-frequency indicators—similar to those used during the early days of Covid—to track port congestion and other proxies for economic activity in China to gauge the actual impact of the trade war on the world's second-largest economy and/or potential spillover risks in the U.S.

By Saturday, we cited high-frequency congestion data from Goldman and BloombergNEF covering major Chinese cities for the seven days ending April 2—before the impact of Trump's 'Liberation Day' tariffs on April 3. The data offered early insight into how the 145% tariffs on Chinese goods could unleash a Covid-like shock, sparking turmoil across the export-driven economy. 

We asked: Are China Road Traffic Indicators Set To Collapse As Tariff War Cancels Factory Orders ... 

Then, on Sunday, we penned another note citing freight data (data between April 1 - 8) from Vizion that provided new insight into "widespread freezes" sending U.S. import bookings into a tailspin.

As dark storm clouds of economic uncertainty gather above, new data (April 7-13 period) from The Wall Street Journal shows that Chinese port activity slumped. Total cargo volume was down 9.7% week-over-week to 244 million tons, and container throughput fell 6.1%, reversing prior gains. 

Key points from WSJ's report:

• The decline is tied to President Trump's 145% tariffs on Chinese goods, which have severely impacted exports to the U.S.

• Freight rates to the U.S. plummeted, with an 18% drop to the West Coast and 10.8% to the East Coast, while rates to Europe and South America surged, suggesting a shift in trade routes.

Trump's effort to unwind decades of disastrous globalism marks a paradigm shift—one that occurs only a few times each century. The resulting tariff disruptions are gathering like a storm on the horizon and are poised to ripple through the global economy. We're monitoring these developments through high-frequency data, which already signal trouble ahead in China's export-driven economy and will soon begin to surface in the U.S.

A deepening trade war needs stability in the U.S. bond market. As we noted in "China Limits Stock Sales To Maintain Impression Of Stability, As Bessent Hints At Boosting Treasury Buybacks If Fed Does Nothing," the real concern remains with the Fed on the sidelines while Beijing enacts counter-stability measures to protect markets.