A potential trade war escalated on Friday, April 4, as the Port of Los Angeles braced for what could be a 10% drop in cargo by midyear. California Gov. Gavin Newsom, meanwhile, floated establishing separate “new strategic trade relationships” between the state and key U.S. trading partners using the state’s ports in an effort to avoid the rising costs.

President Donald Trump on Wednesday announced a 34% levy on goods from China on top of an earlier 20% tariff, as well as a 20% tariff on the EU, 24% on Japan and 25% on South Korea.

The move sent stocks tumbling on Thursday and Friday when China also announced a 34% retaliatory tariff and barred a group of American companies from doing business in China.

Mexico, China, and Canada are the largest trading partners in the Los Angeles-Long Beach port complex with more than 40% of all the nation’s imports and exports handled by the twin ports.

The Dow tumbled 2,200 points Friday and the S&P 500 lost 10% in two days in what was seen as a market free fall.

What could be an entrenched global stand off has further deepened concerns in the U.S. financial sector, according to national media reports on Friday, with investors unleashing a torrent of selling late in the week after Trump’s announcement. Concerns appeared to be rising by Friday, when China announced its retaliation, over what could be continued inflation and the specter of a possible recession should the crisis linger.

A White House statement published online said the policy, which is needed for what it called a “national emergency,” was needed “to increase our competitive edge, protect our sovereignty, and strengthen our national and economic security.”

The goal is to bring more manufacturing and production back to the U.S.

The Trump statement declared that “foreign trade and economic practices have created a national emergency, and his order imposes responsive tariffs to strengthen the international economic position of the United States and protect American workers.”

For now, however, the fallout from the announced policy has businesses and investors panicked and scrambling.

Locally, the focus is on both the Ports of Los Angeles and Long Beach, the nation’s major shipping hubs for southeast imports. The ports have continued to see record cargo numbers this year as importers scrambled to ship goods ahead of anticipated tariffs.

But those days could be coming to an end.

“Volume could decline 10% or more in the second half of this year compared to 2024,” Port of L.A. Executive Director Gene Seroka said in a written statement this week when the tariffs were announced.

He also said prices will “likely go up for American consumers.”

And it could also impact jobs, he added.

“The San Pedro Bay port complex is tied to nearly 1 million jobs in the greater Los Angeles region and 2.7 million jobs across the nation,” he said. “Tariffs and reciprocal tariffs will slow global trade, including in Los Angeles, and begin to chip away at those jobs.”

Port of Long Beach CEO Mario Cordero expressed optimism that the upheaval will be resolved “in the long term.”

“We believe the trade issues at stake will be resolved to the satisfaction of all parties,” Cordero said in a written statement, “given the importance of international trade to all concerned.”

“California leads the nation as the #1 state for agriculture and manufacturing,” Newsom said in a statement reported by the Associated Press on Friday. “And it’s our workers, families, and farmers who stand to lose the most from this Trump tax hike and trade war.”

Among those watching events closely are some 10,000 members of the International Longshore and Warehouse Union’s Local 13 which provides the labor force for both ports.

Local 13 President Gary Herrera said among the broader concerns is that ships may be diverted to unregulated ports in Latin America where it will be cheaper. And that would mean less work for the ILWU and patterns that could linger beyond the tariff crisis.

Adding that there is a current unrelated slowdown with the timing of the Chinese New Year, Herrera said in a telephone interview, “if it stays this way it’s going to affect livelihoods. If (importers) go through non-regulated ports that don’t have safety or worker regulations, or even environmental regulations, (the business) could stay there.”

Also expressing caution over the policy was Federal Reserve Chair, Jerome Powell.

In a statement posted by the National Retail Federation on April 2, NRF President of Government Relations David French said the policy will lead to higher consumer costs for families.

“More tariffs equal more anxiety and uncertainty for American businesses and consumers. While leaders in Washington may not care about higher prices, hardworking American families do,” he said.

The administration has acknowledged there will be “short-term pain” with the new tariffs while critics said the transition process to bring businesses to a U.S. home base is expensive, could be complicated, would likely take longer than expected.

The tariffs, French said, “will have a disproportionate impact on local communities and will be particularly harmful to small retailers.”

He continued: “Tariffs are a tax paid by the U.S. importer that will be passed along to the end consumer. Tariffs will not be paid by foreign countries or suppliers. Even more so, the immediate implementation of these tariffs is a massive undertaking and requires both advance notice and substantial preparation by the millions of U.S. businesses that will be directly impacted.”

Herrera said he hopes the president reconsiders.

I think the president has to really think about the impacts not just on workers but to our communities and what raising prices for everyday needs does to America. The only people feeling the pain off the bat are Americans.”

Cordero, however, expressed some optimism that the situation will eventually be resolved.

“We are certain that international trade will always be foundational to the U.S. and California economies,” Cordero said in a written comment this week.

“As we study the newly announced trade policies, we will work with our industry stakeholders to address their concerns and monitor the trade landscape,” Cordero said. “Our focus is on strengthening our Port and our ability to compete, so that we can continue to facilitate the trade that generates millions of jobs and livelihoods all across the United States.”