Businesses reliant on goods manufactured in the US and China are beginning to see relief in global supply chain bottlenecks as the world’s two largest economies reached a temporary truce in their escalating trade war, recent data reveals.
Maersk, a global leader in shipping and logistics, reported a notable rebound in ocean freight volumes from China to the US following tariff adjustments made in May after trade discussions in Geneva. Freight bookings had previously plummeted by 40% in April, reflecting the uncertainty surrounding the trade conflict.
This resurgence in freight volumes is anticipated to place additional strain on US West Coast terminals, particularly in Los Angeles and Long Beach, as well as on inland distribution networks, Maersk noted. Key gateways are expected to experience increased cargo traffic in the coming weeks.
Easing Pressure on Manufacturing
The revival of US-bound shipments coincides with a stabilization in North American and Asian manufacturing, which had experienced declines in April after an initial wave of stockpiling. According to the GEP Global Supply Chain Volatility Index, the pause in tariffs has provided much-needed relief to manufacturers in both nations.
“The suspension of tariffs is a significant reprieve for manufacturers in the US and China,” said John Piatek, Vice President of Consulting at GEP.
Together, the US and China account for 43% of global GDP and nearly 48% of global manufacturing output, according to World Bank data. Resolving trade tensions between these two economic giants is critical for global commerce and international stability.
A Stress Test for Global Supply Chains
US-imposed tariffs have served as a stress test for a global supply chain still recovering from the disruptions of the COVID-19 pandemic. Experts argue that the trade relationship between the US and China is so deeply intertwined that decoupling is neither practical nor economically feasible.
While the US is a leader in advanced technology, China depends on American components for its automotive, electronics, and technology industries. Additionally, major US exports to China include minerals, appliances, oils, nuclear reactors, aircraft, and food and beverages. According to the US-China Business Council, nearly 930,000 American jobs are tied to exports to China.
Tom Fullerton, an economist and professor at the University of Texas at El Paso, highlighted the challenges posed by US tariffs on imports such as steel, aluminum, and auto parts. “The United States does not produce enough of these goods to meet domestic demand, so imports are essential to bridge the gap,” he explained.
Uncertain Path Forward
The 90-day suspension of reciprocal tariffs, introduced on April 2—dubbed “Liberation Day”—is set to expire next month. The UK was the first nation to secure a trade agreement with the US under these terms, with other countries currently in negotiations.
However, Fullerton warns that reverting to the previous tariff regime could have severe consequences for US businesses, potentially triggering stagflation. “Prolonged enforcement of these tariffs will exacerbate inflationary pressures and may lead to stagflation as businesses struggle to remain viable,” he cautioned.
The global supply chain remains heavily reliant on Chinese manufacturing for goods such as ships, ceramics, and textiles. According to data from the International Trade Center, transitioning to alternative suppliers for these products would require years of effort, substantial financial investment, and the development of entirely new supply chains outside of China.
Broader Economic Impact
The ramifications of the brief trade war are still under close scrutiny by economists. In May, US retail sales recorded their steepest decline since March 2023, according to the US Census Bureau. Many consumers had preemptively stockpiled goods to avoid potential price hikes driven by tariffs, leading to a pullback in spending.
As the global supply chain navigates this period of uncertainty, the long-term effects of the US-China trade relationship will remain a focal point for policymakers and businesses alike.
Source: https://www.chinadaily.com.cn/a/202506/19/WS68536a6da310a04af22c730b.html
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