April 30, 2025 (The Economist) –
Five years ago, when the pandemic shut down the global economy, frazzled economists turned to novel measures, such as mobility data and restaurant bookings, to track the closure in real time. Now the world is desperate to assess the damage caused by Donald Trump’s swingeing tariffs on Chinese imports, and pundits are again using innovative techniques. Their findings suggest the world’s biggest economy is not reeling yet. But trouble is coming.
Even before the implementation of many of the tariffs, on April 9th, polling suggested American consumers and businesses were already worried. According to a survey by the Dallas branch of the Federal Reserve, manufacturers’ output fell to a record low in April. But such statistics can mislead. Americans allow their political views to colour how they think the economy is doing. During Joe Biden’s presidency they frequently reported low confidence while continuing to spend, making the readings less predictive. On the other hand, “hard” data, such as payroll and GDP estimates, describe a world that no longer exists. Strong jobs numbers for March reflect the behaviour of firms at a time when Mr Trump’s tariff threats remained vague.
Real-time data aims to avoid both pitfalls by providing a timely picture of activity across the economy. Many covid-era indicators are not relevant or no longer published. Fortunately, however, global trade is thoroughly tracked. Ships set off weeks in advance of their arrival, broadcasting their position to satellites and providing a list of what they contain.
Some data might suggest a limited impact from the trade war so far. In the week ending April 25th ten container ships, carrying 555,000 tonnes of goods, arrived at the ports of Los Angeles and Long Beach—America’s preferred entry gates for goods from China. That is about the same as a year ago. But sailing between China and America’s west coast takes between two weeks and 40 days. Many cargo ships arriving now set off before the tariffs began.
Other indicators look scarier. Bookings for new journeys between China and America plummeted by 45% year-on-year in the week beginning April 14th, according to Vizion, a data firm. The number of blank sailings, when a vessel skips a port or a carrier runs fewer ships on a route to even out the service, has risen to 40% of all scheduled trips. Pricing data suggests trade flows are being reshuffled. The cost of sailing between Shanghai and Los Angeles has fallen by about $1,000 in the past month, according to Freightos, a logistics company, as companies have gone from “front-running” the tariffs—by importing more than usual to beat the implementation deadline—to avoiding them. The price for ferrying goods from Vietnam to America has risen by a similar amount, suggesting importers have been looking for alternative suppliers.
Could some of these alarms be false ones? Shipping data is seasonal and volatile: the 30% year-on-year drop in scheduled bookings into Los Angeles, for instance, is within the normal week-to-week variation. Smaller ports, such as Seattle’s, see only one cargo ship arrive a day on average. Going a few days without seeing a ship arrive may not be unusual. Nor do more widely used high-frequency indicators signal the economy has already stalled. Credit-card spending and job openings in America were at roughly the same levels in April as the same month in 2024, according to Barclays, a bank.
But pain is probably coming. Trade shocks can take a while to propagate through the economy: some companies will have built inventories before the tariffs came into force. Demand for bonded warehouses, which allow goods to be stored near ports and pay customs only once they are released, has surged. Many companies are opting not to raise prices—which in theory they should do, to ration their stockpiles—because they are bound by pre-existing contracts or want to preserve relationships with customers in case Mr Trump backs down. They may be forced to do so soon enough.
The uncertainty created by Mr Trump’s erratic tariff policy has caught many shipping firms off guard, says Peter Sand of Xeneta, a logistics consultancy, even after a decade that has seen them navigate squalls caused by the pandemic, a blockage of the Suez Canal and Houthi attacks in the Red Sea. That will take a toll on trade and the wider economy even if America cancels its most punitive measures. Ships that failed to depart on time will arrive with a lag, or not at all. Inventories will be run down. Many businesses will have frozen investment and hiring plans which they may be slow to restart. America is not yet suffering from a self-inflicted trade storm. But the shipping forecast is not good.
Copyright © The Economist Newspaper Limited. 2025
* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistribute or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.