West Coast Ports Face Steep Declines as Tariffs Reshape Trade Realities

The West Coast’s bustling ports, once the lifeblood of U.S.-Asia trade, are now grappling with a seismic shift. According to TD Cowen analysts, freight volumes at major ports like Los Angeles and Long Beach have plummeted by 30% in recent years, driven by the lingering effects of U.S.-China tariffs and corporate supply chain reconfigurations. The decline isn’t a blip—it’s a structural shift with lasting implications for investors, businesses, and the broader economy.

The Tariff Effect: A Perfect Storm

The roots of the decline trace back to the U.S.-China trade war, which saw tariffs on $360 billion of Chinese goods. Companies, faced with spiraling costs, began relocating manufacturing to tariff-free regions like Vietnam and Mexico. Containerized imports from Asia—once the bedrock of West Coast ports—have borne the brunt.

TD Cowen’s analysis underscores a grim trajectory: annual declines of 5–7% in West Coast port traffic starting in 2024 could lead to a 20–30% cumulative drop by 2025. The Port of Los Angeles, the nation’s busiest container port, saw imports fall by 30% in 2023–2024 alone, a trend mirrored at Long Beach. These declines aren’t just cyclical; they reflect a permanent shift as corporations diversify suppliers to avoid tariffs.

Matson (MATX), a Hawaii-based logistics firm with ties to West Coast ports, has seen its stock dip 15% year-to-date, reflecting investor nervousness over declining cargo volumes.

Beyond the Ports: Economic and Geopolitical Ripples

The decline isn’t confined to port operators. Retailers and manufacturers reliant on Asia-based suppliers face higher costs and logistical hurdles. Walmart and Target, for instance, have already shifted 30% of their sourcing to Mexico since 2020. Meanwhile, inflation could ease as reduced import volumes lower excess demand, but this comes at the cost of disrupted supply chains.

Geopolitically, the trend underscores a broader decoupling of U.S.-China economic ties. U.S. companies are no longer willing to tolerate tariff volatility, accelerating a decades-long trend of offshoring to lower-cost, politically stable regions. Vietnam’s GDP, meanwhile, has grown at a 7% annual clip as it absorbs displaced manufacturing.

Investment Implications: Navigating the New Reality

Investors must recalibrate their strategies in this environment:
1. Avoid Overexposure to Port Stocks: Companies like APM Terminal (part of Maersk) or local port authorities may face sustained revenue pressure.
2. Look to Logistics Diversification: Firms like C.H. Robinson (CHRO) or XPO Logistics (XPO), which manage cross-border supply chains, could benefit from reconfiguration needs.
3. Bet on Tariff-Free Regions: Infrastructure in Mexico and Southeast Asia—ports, rail, and factories—is primed for growth.
4. Monitor Inflation and Interest Rates: Lower import volumes could temper inflation, aiding rate-sensitive sectors like housing and consumer discretionary.

Conclusion: A New Era of Trade Dynamics

The 30% freight decline at West Coast ports isn’t a temporary setback—it’s the new normal. With TD Cowen’s projections pointing to a further 20–30% drop by 2025, investors must acknowledge that global trade patterns are permanently altering. The data is unequivocal: tariffs have forced a tectonic shift in supply chains, and those who adapt—by diversifying suppliers, investing in resilient logistics, or targeting emerging markets—will thrive. For the ports themselves, the challenge is existential. Without meaningful reforms or new trade agreements, their golden age of Asia-centric trade may be over. The question now isn’t whether tariffs will fade, but how quickly businesses and investors can pivot to the next chapter of globalization.