Josh Marshall:

It’s only getting much play in the trade/transport niche press. But pretty real product shortages beginning in mid-May or so are already locked in. They’re maybe a thousand miles out in the Pacific Ocean. Modern trade takes place in gargantuan container ships. There are very detailed records for every one at sea, when it left China, the US port it’s traveling to etc.

I’m doing this from memory so the rough dates may be a few days off. But this last week we were still in a surge of week over week and year over year shipping as shippers and buyers tried to get out ahead of the tariffs. So it’s actually higher than usual because of that. But in the first and second week of May it drops off dramatically.

I’ve heard the drop off described in different ways. But the most optimistic seems to be a reduction in imports of about 50% or a bit less. Ships to the west coast go and to the east coast through the canal. So it hits the west coast first. Then it shows up in Chicago a week or so later as rail and trucking freight drop off. Then on the east coast as ships don’t arrive there.

I was talking to one regional banker in the mid Atlantic who told me that after the first week or may there are simply no ships from China arriving. Whatever the precise specifics the point is that this is already locked in. The severe drop off has already happened but it’s all off set by weeks because the Pacific Ocean is big and ocean freight speed is relatively slow. And it has knock on effects in domestic shipping.

It will hit trucking hard but that’s still a couple weeks away. Even if you only have roughly a 50% drop off in volume that shows up not just as rising costs but shortages. And even Trump woke up tomorrow and called everything off you’d still have a significant period of shortages locked in. And obviously that’s not going to happen.

We will also almost certainly see a limited version of the supply chain snarls we say during the pandemic. There are reports of some containers simply sitting or being abandoned in ports. Also when there’s no product you start laying off truckers or independents do something else. So when the product comes back on line the system to move the product out of port doesn’t come back immediately.

The upshot is that we’ve already locked in a long hot imports summer regardless of what happens now.

There are local stories here in LA about truckers being laid off and the Porto of Long Beach already feeling the effects. That’s about to go into warp speed in the next week or so.

Someone must have told Trump this would happen. I assume he said (as he’s been reported to have said on a number of subjects) “fuck it.” He thinks America loves him so much they’re willing to sacrifice themselves for his genius and once other countries feel the pain they will bend to his will and eliminate tariffs and America will somehow become richer than ever. It never made sense but for some reason people voted for him anyway and the Republican party saw his popularity among about 40% of politically illiterate voters as a mandate to go along with it.

The markets felt the earthquake first but the tsunami is about to hit the real economy next. When you combine it with the assault on the federal government from Vought and Musk, and all the safety nets being dismantled, you are looking at an epic disaster coming at us.

Buckle up. As Marshall says, it’s going to be a long hot summer.