Summary:
- U.S. imports from China have increased to 37% in 2024, up nearly 7% from the previous year, underscoring China’s critical role as a supplier despite global disruptions.
- New and expanded tariffs on strategic goods like electronics and steel have complicated the U.S.-China trade environment, pushing U.S. importers to adjust their sourcing strategies.
- Labor negotiations at U.S. East & Gulf Coast ports remain unresolved, so a possible strike in January threatens further disruptions and increased dwell times.
- Shippers are preemptively pulling forward inventory to avoid risks associated with tariff changes and potential prolonged labor strikes.
- Changing trade policies and the threat of increased tariffs under the incoming administration are prompting U.S. companies to reassess nearshoring and other sourcing options.
Overview
China’s position as a global manufacturing powerhouse continues to influence U.S. economic strategies and supply chain dynamics. Despite recent disruptions in shifts in global politics and health crises, the United States still sources more than 16% of total imports from China annually. Factors like competitive labor costs, substantial government subsidies for manufacturing, and access to lower-cost raw materials have entrenched China’s role as a critical supplier for a vast range of goods and resources on which the United States depends.
Proportion of imports from China
According to data from the millions of ocean shipments that project44 manages annually, the share of ocean imports to the U.S. from China has notably increased over the past three years. The charts below outline the percentage of import containers to the United States originating from China.
The annual proportion of imports from China has risen steadily over the past three years, with YTD 2024 figures standing at 37%–a near 7% increase from the previous year. Breaking this down further, the chart below shows the monthly proportional changes in imports from China in 2024 compared to the same months in 2023.
Notably, except for April, every month in 2024 saw an increase in the proportion of imports from China when compared to 2023. The spike in January is attributable to the timing of the Lunar New Year, which was in February 2024 compared to January 2023. The consistent increases throughout the rest of the year can be attributed to two major factors:
- The introduction of new tariffs on Chinese imports to the US
- Looming labor uncertainty around US East and Gulf Coast ports
Tariff impacts on imports
The tariff landscape between the U.S. and China has been dynamic and significant in shaping trade relations between the two countries over the last several years. The first Trump administration imposed substantial tariffs on a broad array of consumer products from China, which fundamentally altered the cost structure for many U.S. businesses relying on these imports. When President Biden took office, he maintained most of these tariffs and, in May 2024, announced an expansion of them to include additional imports including steel and aluminum, electric vehicles, batteries, solar cells, syringes and needles, and semiconductors, further complicating the trade environment and impacting many U.S. industries including automotive, electronics, renewable industry, medical devices, construction, and heavy machinery.
The Biden Administration’s expanded tariffs, which went into effect in September, are detailed below.
The chart below outlines the percentage of imports from China around the time that these tariffs were announced.
Although the tariffs are likely not the only reason that this percentage increased, there is a clear uptick starting in May when the tariffs were announced through September when they took effect. While some of this may be attributed to the labor uncertainty, there is a strong correlation between the announcement of the new tariffs and the increase.
With former president Trump’s re-election, there is an anticipation of more extensive tariffs on imports from China, as well as on goods from other countries, including Mexico and Canada. Following his election victory, shippers began pulling forward inventory in anticipation of potential future tariffs. While the new administration will not take office until January 20, 2025, so what the new tariffs will look like and if they happen is still uncertain, the possibility of sweeping tariffs has already led shippers to adjust purchasing patterns to mitigate risks and potential costs.
The repercussions of tariffs impact not only pricing and availability of goods in the U.S. market but also the strategic decisions companies must make regarding sourcing and manufacturing. As tariffs increase the cost of imports, businesses may seek alternative sources of reshoring some operations to mitigate risks. Historically nearshoring to Mexico has been a common practice, due to lower costs and the favorable terms of trade agreements between the U.S. and Mexico. However, changing trade policies and the possibility of new tariffs from the incoming Trump administration make that a less attractive solution for many U.S. importers.
The uncertainties of changing administrations and high costs and complexities of adjusting supply chain strategies in response mean businesses face persistent challenges in planning and executing effective U.S. import strategies. This evolving trade landscape necessitates agile and informed decision-making to navigate the potential hurdles presented by fluctuating tariff policies.
Labor uncertainty impacts on imports
The unresolved contract negotiations between the International Longshoremen’s Association (ILA), which represents workers at 36 East and Gulf Coast U.S. ports, and the United States Maritime Alliance adds further uncertainty for those importing or exporting from the U.S. The expiration of their contract on September 30, 2024, resulted in a three-day strike in October, and was only temporarily resolved by extending the old contract until January 15, 2025. To date, no further agreements have been reached, leaving the threat of another, potentially prolonged, strike looming.
In the wake of the October strike, although only 3 days, there were surges in both import and export dwell among the East and Gulf coast.
Both charts demonstrate a spike in dwell the week of the strikes, while import dwell has still not fully returned to pre-strike levels on either coast.
Given that these ports handle 43% of the U.S.’ ocean imports from China, in preparation for the potential strike in October, shippers pulled forward inventory to avoid risks of freight disruptions, including delays or cargo becoming stranded at ports. This practice has continued as the January 15 deadline approaches without resolution.
Summary
In 2024, the proportion of U.S. imports from China rose to 37%, reflecting a nearly 7% increase from the previous year, as China continues to play a crucial role in global manufacturing despite ongoing global challenges. The landscape of U.S.-China trade relations has been further complicated by new and expanded tariffs targeting strategic goods, compelling U.S. businesses to revisit their sourcing and pricing strategies. Additionally, unresolved labor negotiations at major U.S. ports have led to temporary operational disruptions, influencing shippers to adopt preemptive inventory management tactics in anticipation of both tariff changes and potential strikes. With the re-election of President Trump and the threat of more stringent tariffs, U.S. companies are increasingly considering alternatives to traditional sourcing methods, including reshoring and nearshoring, in response to the evolving trade policies.
