Despite few tariff impacts to date, SC Ports users fear what might be ahead

Update on May 12: The White House and China on Monday announced they will pause their punitive tariffs for 90 days to give each side more time to negotiate a trade war that has upended global trade. U.S. tariffs on Chinese goods will fall to 30% while China will charge a 10% tariff on U.S. goods. The move delays the triple-digit tariffs through the key holiday-shipping season, as some analysts expected.

CHARLESTON — President Donald Trump’s erratic tariff policies are roiling global trade, forcing South Carolina businesses and nearly every sector of the state’s logistics network to question where they go from here.

“It was like stopping a Ferris Wheel, and you’re sitting at the top,” maritime industry analyst Jim Newsome, former president of the S.C. State Ports Authority, said of the frozen future many industries are facing since Trump’s “Liberation Day” tariff announcements on April 2.

“Everybody is bracing for the impact,” he said.

Unlike their West Coast counterparts, the Port of Charleston has yet to see any major impacts from the Chinese shipping slowdown resulting from Trump’s 145% tariffs on that country’s imports.

That’s because transits to West Coast ports are shorter, and those ports typically have a much greater exposure to Chinese goods.

Year-over-year cargo levels measured by the equivalent of 20-foot-long containers — or TEUs in maritime jargon — moving through Charleston’s terminals have held steady or even increased this spring as retailers and others frontloaded shipments ahead of the tariffs.

That’s about to change, analysts say, because cargo that takes weeks to arrive along the East Coast will now be hit with the tariffs.

By June, ports in Charleston, Savannah and along the East Coast could see noticeable drops in cargo if tariff policies don’t change.

On average, about half of the freight bound for Charleston’s port either originates in or has major stops in China, which reported Friday that April shipments to the U.S. dropped by 21%.

Ocean liners in recent weeks have canceled about 17% of the container ships scheduled to travel to East Coast ports because of cargo shortages, according to Copenhagen-based maritime research group Sea-Intelligence.

Flexport, a San Francisco-based leader in supply chain management, says at least one weekly container service calling on Charleston has suspended trips altogether through mid-June.

Barbara Melvin, president and CEO of the State Ports Authority that owns and operates the Port of Charleston, declined to comment on tariff impacts.

But John McCown, a non-resident senior fellow at Arlington, Va.-based Center for Maritime Strategy, has a bleak outlook.

“I’m thinking a 25% overall (drop in cargo) could be conservative if things stay the way they are,” said McCown, author of the John McCown Container Report.

“I suspect the actual numbers will show reduced economic activity across the entire container shipping supply chain that will touch every port,” McCown said. “In addition, the tariffs will also result in noticeable inflation.”

‘Dropping like flies’

Some cracks are already starting to show.

A few trucking fleets at Charleston’s port, particularly those that handle Chinese imports, are seeing as much as 30% to 40% slowdowns, according to Rick Todd, president and CEO of the South Carolina Trucking Association.

“General trucking remains in a ‘worst ever’ freight and rate trough,” he said. “Combine that with relentless cost increases and we are finding smaller and more marginal fleets dropping like flies.”

About three-fourths of cargo at Charleston’s port moves by truck.

“The tariff/trade slowdown, with uncertainty, will exacerbate capacity leaving the market,” he said.

Todd’s counterpart in Georgia said that state is also “starting to see some ripples” in trucking volumes.

“But I think probably in another two to three weeks those ripples are going to start to turn into waves,” Seth Millican, president and CEO of the Georgia Motor Trucking Association, told the Atlanta Journal-Constitution.

The Georgia Ports Authority has also seen little impact to date from tariffs, posting record volumes in March.

Griff Lynch, the authority’s president and CEO, said the port is talking with customers about how to mitigate tariff costs and using Savannah’s Garden City Terminal West to store containers and manage supply chain fluctuations.

Railroads that serve Charleston’s port say it’s hard to measure future tariff impacts.

“Tariffs could be a headwind to volumes for the rest of the year,” Ed Elkins, executive vice president and chief commercial officer for Norfolk-Southern, told analysts.

The biggest risk is an overall economic slowdown due to tariffs, he added.

CSX Corp. CEO Joe Hinrichs said near-term demand is “pretty strong” but “the keyword you’re hearing from everybody is uncertainty.”

Job cuts at Volvo

About half of all imports to the U.S. are parts needed by manufacturers, including the Palmetto State’s $27 billion vehicle industry. Most of that cargo is moved by truck.

Volvo Cars this week announced layoffs totaling 5% – roughly 100 people – at its Berkeley County manufacturing campus, citing “challenging macro conditions” including tariff threats.

“The adjustment is due to changing market conditions and evolving trade policies, including tariffs,” a Volvo spokesperson said. “Our aim is to build where we sell, and we will continue to balance our ongoing investments in the U.S. with the need to optimize costs and drive greater efficiency in the current environment.”

Volvo also plans to add new models to its Lowcountry plant, which currently builds the battery-powered EX90 sport-utility vehicle, to offset tariffs on foreign-made cars.

BMW – the state’s largest automaker and the nation’s top vehicle exporter, primarily through Charleston’s port – said this week it has been making a case for tariff relief with White House officials but acknowledged the current status would have a “notable” impact on its second-quarter earnings.

Front-line workers at the port will also take a hit if tariffs lead to less cargo.

The International Longshoremen’s Association supplies thousands of dockworkers in Charleston, and those workers typically are paid only when there are ships to load and unload.

The ILA, which supported Trump’s election, has not issued any formal statement on tariffs. And Ken Riley, president of the union’s Charleston branch, did not respond to a request for comment.

A cloudy crystal ball

Tariffs that are announced one day and paused or canceled days later are adding confusion to South Carolina’s trade outlook.

“Nobody has an accurate crystal ball on the effect of these unprecedented catalysts,” McCown told Freightwaves.

Some of the biggest import commodities at Charleston’s port are Chinese tariff targets, including toys, apparel, footwear, televisions and other electronics. Combined with a 10% universal tariff on goods from most other countries, U.S. imports are projected to plummet.

Analysts disagree on how big the drop will be. The National Retail Federation puts the number at 20%. JP Morgan pegs it at up to 80%.

Walmart, which operates a 3 million-square-foot import distribution center in Ridgeville that supplies goods to 850 stores, said it is negotiating prices directly with overseas suppliers to blunt tariff impact.

Smaller businesses don’t have that luxury.

“It’s clear this is going to be a severe problem for small businesses because they don’t have the capacity to make bulk purchases or change their supply chains,” said Frank Knapp, president and CEO of the South Carolina Small Business Chamber of Commerce. “You’re going to see businesses shutting down.”

Scott Bessent, the U.S. Treasury Secretary and a South Carolina native, is in Switzerland this weekend meeting with Chinese officials to talk trade. Bessent has said he doesn’t expect a major breakthrough, telling Fox News: “My sense is that this will be about de-escalation.”

Trump preempted Bessent’s talks Friday by posting on his Truth Social account that 80% tariffs on Chinese goods “sounds right” – the first indication that his stance is softening.

But lowering tariffs from 145% to 80% tariffs is still unsustainable and unlikely to move the needle on trade.

Newsome, the former port director-turned-president of Jim Newsome 3 consultants, said Trump’s tariffs are based on the flawed premise that they will bring manufacturing back to the United States.

“Forget about it,” he said. “You might be able to bring back some high-value manufacturing with a high potential for automation. But it’s never going to be the case that you’re going to bring a toy made in China back to the United States.”

There’s also no way to balance trade with China, he said, because that country “doesn’t have the consumption power we do.”

The per-capita U.S. income of $43,289 is more than 7.5 times greater than China’s.

“How do you balance that?” he said. “I think that kind of narrative got us off on the wrong foot.”

Newsome said he’s hopeful that reality is finally getting through to the president, and he thinks there will be too much pressure from retailers and other businesses for Trump’s China policy to persist. Retailers need holiday-shopping goods in their warehouses this summer, and they aren’t likely to sit by quietly if tariffs interrupt those shipments.

“The best outcome, the hopeful outcome, would be they have a good discussion (in Switzerland) and agree that things got out of hand a bit,” Newsome said. “Let’s push the tariffs off for 90 days to give some time to negotiate. That gets us past the Christmas shipping season.”

McCown agrees there will be intense political pressure to end the Chinese tariff war, but he’s skeptical that cooler heads will prevail.

“At all times and even before this nonsensical tariff policy went into effect, strong reasoned advice not to go down this path has been largely ignored,” he said.