Tariffs Endanger $186 Billion In US Economic Activity, Study Finds

Tariffs the U.S. imposed over the past two years – and retaliatory tariffs that followed – threaten more than $186 billion in U.S. economic activity and could add $31 billion to $35 billion in additional costs to manufacturers and consumers, according to a study released today (Nov. 12) by the Port of Los Angeles.

The study, "By the Numbers: Jeopardizing the National Benefits of Trade through America's Busiest Port Complex," is based on international trade moving through the adjacent San Pedro ports of Los Angeles and Long Beach, the country's largest container port complex. Imports through the two ports flow to every state in the nation, the study points out, and goods grown or manufactured in every state are exported through Los Angeles and Long Beach to global markets, mostly Asia.

"Every urban, suburban and rural community across our nation benefits from imports and exports moving through the San Pedro Bay ports, and ongoing tariffs are putting those benefits at risk," said Port of Los Angeles Executive Director Gene Seroka. "Some regions and industries are already feeling the pain, and the damage to jobs, income and tax revenue could be crippling down the road."

The study shows the number of jobs and how much sales, income and taxes are at risk for every state due to tariffs. The study also shows the economic benefits of these imports and exports to each congressional district and the percentage in each hit by tariffs.

The study notes that most of the U.S. import tariffs that have been imposed or proposed are directed at China, which accounts for most of the imports moving through the San Pedro Bay ports. That includes 57% of containerized imports (by value) and 54% of total waterborne imports. The share of import value that may be impacted by tariffs is estimated to be 56.1% of containerized cargo, 16.7% of non-containerized cargo and 52.7% of total cargo.

Tariff effect on trade at ports of L.A. and Long Beach. Source: Port of L.A.

Tariffs tend to make foreign products cheaper to manufacture, putting U.S. manufacturers at a cost disadvantage. Retaliatory tariffs reduce the demand for U.S. exports, the study asserts, which leads to foreign consumer markets looking elsewhere for products. The trends were reflected in the latest cargo volumes at the Port of Los Angeles, which saw the biggest October drop in volumes in over two decades. The port's October volumes also marked 12 consecutive months of declining U.S. exports, 25% fewer ship calls, and a 19.1% decrease in volume compared with October 2018.

Tariffs and the trade wars have hit the U.S. agricultural sector particularly hard, according to the study, with 26% to 51% of agricultural exports from all 50 states hit by tariffs, based on trade through San Pedro Bay.

"If cargo traffic out of the San Pedro Bay ports is declining because of tariffs it means American farmers and ranchers are hurting," said Angela Hofmann, Co-Executive Director of Farmers for Free Trade. "When tariffs cut off access to markets that are hungry for American livestock, grains, vegetables and other farm products, the economic pain reverberates from ports, to farms to Main Street businesses."

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