As global brands and shipping companies begin to cancel sailings of goods from China in response to President Trump’s trade war, Southern California’s logistics industry faces growing uncertainty.
Los Angeles and Long Beach combined make up the largest port complex in the western hemisphere. Port officials in Long Beach say they expect a 20% decrease in freight volume during the second half of this year, while port officials in Los Angeles expect a 10% decrease. Over the last several months, the ports posted record volumes with companies trying to bring in goods before expected tariffs hit.
Any slowdown at the ports will be felt throughout the local economy, including the price and availability of goods and the number of jobs in the logistics industry. Hundreds of thousands of Southern Californians are employed at the ports, and in trucking, rail, and warehouses. With fewer imports, fewer workers are needed to move goods.
Employment is currently holding steady, but that could actually be a sign that workers are skittish. For instance, spring is the start of seasonal warehouse work related to imports of back-to-school goods. That hiring hasn’t begun, and as freight slows down, layoffs could come next, says Sheheryar Kaoosji, the executive director of the Warehouse Worker Resource Center in the Inland Empire.
“Workers in our industry, unfortunately, don't have a lot of security in their jobs,” says Kaoosji. “And whenever there is a slowdown, the warehousing industry turns down its labor very quickly.”
With no clear resolution on tariffs between the U.S. and China in sight, California stands to lose billions of dollars in revenue. In response, Governor Gavin Newsom challenged the Trump administration’s tariffs in court to try to stop them.
The economy does not thrive on this kind of uncertainty, says Christopher Thornberg, an economic analyst and founder of Beacon Economics. Trump's trade war comes on the heels of the ports and local logistics industry finally starting to normalize from the 2020 pandemic. He says tariffs are another shock to the system, and in the near term, shoppers could see higher prices at checkouts. That could fuel inflation and potentially an even bigger problem — recession.
“What it does leave is yet more uncertainty in our world right now,” says Thornberg. “And that uncertainty creates its own kind of distress.”