American Ports See Record Traffic

As they adjust to the tariff uncertainty

“The Port of Los Angeles recorded its busiest month in its 117-year history this July, handling over 1 million Twenty-Foot Equivalent Units (TEUs) as retailers and manufacturers accelerate shipments amid concerns over impending tariff increases,” the shipping news website gCaptain reports. This was “an 8% increase over last year and the highest monthly import volume ever recorded at the port.”

The surge is happening everywhere, not just L.A. “U.S. container imports surged to 2,621,910 twenty-foot equivalent units (TEUs), up 18.2% from June and 2.6% higher than July 2024 — and just 555 TEUs shy of the all-time record set in May 2022,” Descartes.com reports. “The 18.2% month-over-month increase signals a dramatic shift in global shipping patterns as importers race against impending trade policy changes.”

Everyone is bracing now for the impact later. “The July recovery reflects a combination of seasonal demand and suspected frontloading in response to the 30% temporary tariff rate on Chinese imports set to expire in mid-October.” The Chinese share of American imports “rose to 35.2% in July, up from 28.8% in June” as American retailers locked in their purchase orders for the fourth quarter and the holiday season.

The key driver here is uncertainty. Donald Trump is negotiating trade deals with one hand and issuing tariff orders with the other, a carrot-and-stick approach that creates uncertainty in the markets. But mainstream economists are also responsible for the chaos because their models do not account for trade deficits and assume incorrectly that the full cost of any tariff is borne by the consumer.

As a result, their predictions of imminent doom have all failed, and “tariff-induced price increases have proven marginal. The overall inflation rate stands at 2.7%, below the 3% rate in January, before Trump took office.” But when did failure ever stop ‘the experts’ from continuing to be wrong? Indeed, “some economists” have told ABC News that they still expect doom “within a matter of months,” when all this stockpiled inventory runs out.

Goalposts keep moving. Elizabeth Renter, a senior economist at NerdWallet, told ABC News that the inflation will come by stealth. “Consumers aren't likely to experience a surge in prices across the board in a single week or month. Instead, the impact of tariffs on consumer prices will happen at a trickle, affecting various categories of goods at different times and to different extents.” The instant tariff catastrophe is now slow-motion, almost invisible, but still awaits us, according to this view.

“Tariffs have not caused Inflation, or any other problems for America, other than massive amounts of CASH pouring into our Treasury's coffers,” Trump posted on Truth Social last week. “Also, it has been shown that, for the most part, Consumers aren't even paying these Tariffs, it is mostly Companies and Governments, many of them Foreign, picking up the tabs.” His enemies are counting on him to be wrong, but what if he is right?

“S&P Global Ratings said revenues from Donald Trump’s tariffs will help soften the blow to the US’s fiscal health from the president’s tax cuts, enabling it to maintain its current credit grade,” Bloomberg reports. “The company expects net general government debt to surpass 100% of GDP over the next three years, but it thinks the general government deficit will average 6% from 2025 to 2028, down from 7.5% last year.” Long bonds fell on the news while treasuries rose.

In interviews yesterday and this morning, Treasury Secretary Scott Bessent spoke about using tariff revenue to pay down the national debt, a populist priority. “President Trump and I are laser-focused on paying down the debt, so I have been saying that tariff revenue could be $300 billion this year, I’m going to have to revise that up substantially,” he said. Watch:

“I think that we’ll bring down the deficit-to-GDP [ratio], we’ll start paying down debt, and then at a point, that can be used as an offset to the American people.” In other words, tariff revenue will ideally replace tax hikes as the first-choice revenue stream for the federal government.

Uncertainties remain. Trade negotiations with Brazil are still stuck, and there are fears that capital investment might slip. However, the biggest question mark of all is China, which is always the exceptional nation in Trump’s trade policy. At the moment, Beijing and Washington are holding open-ended negotiations. The longer they talk, the better for American consumers.

The problem for Trump administration trade and tariff war critics is that they have made consistent doomsday predictions that were wrong. Perhaps economic doomsday is in fact coming, but so far it has not. If it never really arrives — if the American economy is in recovery by Christmas and the store shelves are not empty — then Donald Trump will have defied expectations that were set too low. His enemies always underestimate him.

Moreover, they have underestimated Scott Bessent and Stephen Miran, Trump’s economists. Bessent and Miran understood how the markets would react to tariffs when they formulated their plan for a ‘Mar-a-Lago system’ a la Bretton Woods. So far, their predictions have been far more accurate than the predictions of their critics, who all need to consider the possibility that they were wrong. Another ‘academic consensus’ turns out to be wrong, who could have seen that coming?