The escalating tariff war between the United States and China is causing significant disruptions in key Chinese ports.
As of this week, major shipping terminals in Shanghai and Guangdong, which usually handle a large portion of China’s trade with the U.S., are nearly empty of cargo ships bound for American ports.
The situation has worsened as ports struggle with containers that missed the crucial April 9 deadline, reports from industry insiders reveal.
Factory production has stopped in key export hubs like Zhejiang and Guangdong, which together make up a large part of China’s 2024 exports.
Goods that were once destined for the U.S. are now left abandoned in warehouses, with no clear plans for their redistribution.
The cause of the disruption is a sharp increase in U.S. tariffs. U.S. President Biden’s administration announced that tariffs on Chinese imports would rise to 125%, effective immediately.
The White House later clarified that this figure includes an additional 20% levy already in place due to concerns about China’s involvement in the fentanyl trade, meaning the total tariff on Chinese goods now stands at 145%.
This escalation comes after months of back-and-forth tariff hikes, beginning when the U.S. imposed a 10% tariff on Chinese goods in early February, citing Beijing’s role in the fentanyl crisis.
In retaliation, China raised its tariffs on U.S. goods, including coal, natural gas, crude oil, and machinery.
Just days before the new tariffs took effect, Chinese ports, including Shanghai’s Yangshan and Waigaoqiao terminals, were flooded with activity as cargo ships rushed to complete shipments before the deadline.
However, with the deadline passed, these once-bustling ports have seen operations come to an almost complete standstill.
Similar disruptions have been reported in Guangdong’s Yantian terminal, a critical shipping hub in Shenzhen.
Local business owners, including one from Guangdong who witnessed the slowdown firsthand in Shanghai, reported containers piling up at port facilities.
An employee from China’s state-owned COSCO Shipping Holdings confirmed that freight owners are still trying to clear shipments through customs, but many containers that missed the April deadlines are now left stranded in yards.
In response to the situation, U.S. Customs and Border Protection has clarified that shipments already in transit- those loaded onto vessels on or before April 5, will not be subject to the new tariffs.
However, this provides little relief to businesses already caught in the fallout.
The consequences of these tariffs are already being felt in the broader Chinese economy. In 2024, China exported nearly $439 billion worth of goods to the U.S.- a 2.8% increase from the previous year.
However, analysts warn that these new tariffs could cause China’s exports to the U.S. to plummet by over 50% in the coming years, leading to a GDP contraction of up to 1.5%.
In 2024, Guangdong exported $826 billion in goods, including electronics and phone parts, while Zhejiang’s exports, mostly automobile components, semiconductors, and refined petroleum, totalled $549 billion.
With production on hold, local businesses are under pressure.
One business owner from Qingdao, a major city in Shandong, described the situation as “dire,” and added that “If we don’t perform well here, the economy will collapse,” the businessman said, expressing frustration with the uncertainty of the future.
For now, experts predict a reduction in shipping capacity, with up to 40% of container voyages between China and the U.S. expected to be cancelled between April 14 and May 11.
Reference: RFA, TOI
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