A new report highlights the potential devastation of Southern California’s $300 billion trade and logistics industry due to President Trump’s tariffs and mounting environmental regulations.
Commissioned by the Southern California Leadership Council (SCLC) and released by the Los Angeles County Economic Development Corporation (LAEDC), the findings raise alarms as economists and business owners express concerns over the damaging effects of escalating trade tensions on the U.S. economy.
Southern California, which boasts the nation’s two largest ports, relies heavily on trade with China. The steep tariffs imposed on Chinese goods are particularly alarming, as jeopardizing this long-standing relationship could have severe ramifications for local industries.
Former California Governor Gray Davis, who co-chairs the SCLC, likened the situation to a sports team making detrimental trades, stating, “This is like having a winning sports team and deciding to trade all your players.”
In 2022, Southern California’s trade and logistics sector contributed nearly $300 billion in direct economic output and generated $93.3 billion in tax revenue, according to the report.
This vital sector supports approximately two million jobs, directly employing over 900,000 workers who earn an average salary of more than $90,000, which is 26% higher than the regional average.
The San Pedro Bay ports alone handled 19 million 20-foot container equivalent units in 2022, representing nearly 35% of all U.S. waterborne containerized trade, with a total cargo value exceeding $469 billion, making it the busiest container complex in the nation.
The report warns that an ongoing trade war with China threatens this advantageous position, with China identified as Southern California’s largest trading partner, facilitating about $130 billion in imports through the Ports of Los Angeles and Long Beach.
It states that a potential 145% tariff on Chinese goods, along with a retaliatory 125% Chinese tariff on U.S. goods, would significantly hinder the region’s trade.
The Port of Los Angeles anticipates a cargo volume decline of at least 10% as early as May, with no recovery in sight for the rest of the year.
This drop is expected to have a ripple effect throughout the region’s supply chains, affecting port operators, haulers, and wholesalers, which could ultimately lead to job losses.
In addition, thousands of Southern California importers may confront costs that are potentially two-and-a-half times higher for inputs, costs that will likely be passed down to consumers.
The report further emphasizes that economic uncertainty surrounding the tariffs could deter foreign investment in the region, putting at risk foreign-owned enterprises that currently employ nearly 67,000 workers and contribute $5.8 billion in wages.
Davis expressed support for the underlying goals of the tariffs, such as promoting U.S. manufacturing, but criticized the approach taken by Trump’s administration. He argued that the strategy of “hammering people over the head” would not resonate with business leaders.
Davis suggested that financial incentives, akin to those established by the 2022 CHIPS Act for chip manufacturing, could be more effective. The LAEDC report echoed this sentiment, recommending similar incentive programs to promote clean energy solutions within the industry.
While the LAEDC did not release specific projections for potential financial losses stemming from the tariffs, Stephen Cheung, the organization’s Chief Executive, points to historical examples for context.
In the 2018 U.S.-China trade war, retaliatory tariffs on goods such as wine resulted in a 25% drop in U.S. wine exports to China. Cheung noted, “If you use the same logic model, you can see how it’s going to hit us pretty significantly.”
As Southern California navigates these turbulent economic waters, the future of its trade and logistics industry hangs in the balance, raising critical questions about the effectiveness of current trade policies.
image source from：https://www.latimes.com/business/story/2025-04-22/tariffs-impact-trade-industry-southern-california
