De Minimis Phase-Out Potentially Will Divert Resources, Create More Work for Customs, Port Exec Says

"In the end, [the outcomes are] higher prices, probably fewer orders. For our great customs agents on the ground here in Los Angeles, a lot more work to do." Domestic overnight deliveries will turn into next-week deliveries, he said.

"You're going to have a lot of people on the ground trying to assess the duties and taxes for these products, taking a lot of our resources away from the traditional day-to-day business."

Zachary Rogers, the featured guest for the media briefing, also said that shipments that would have been eligible for de minimis could face longer delivery times because of the additional customs processes attached to their transport.

"It's good now that they've given more time [to adjust, because] when they just chopped off de minimis earlier this year, obviously, it led to a big traffic jam," Rogers said, referring to the end of de minimis for goods from China under the International Emergency Economic Powers Act tariff (see 2504020082). Rogers is an assistant professor of supply chain management at Colorado State University.

However, smaller businesses could get hurt by the removal of de minimis, Rogers said. He continued: "I would expect that most large companies are going to find ways around this and be okay. Where I'm really concerned is with the people who de minimis was meant to protect in the first place, small businesses doing these tiny shipments [and] trying to get off the ground. Those folks will hurt. There will be some slowdowns, because now I have to check everything. But for large companies, I don't think it's a huge issue."

Besides discussing de minimis, the port reported that it handled an all-time record 1.02 million twenty-foot equivalent units in July, surpassing the previous record set in May 2021 by 8,000 container units. Imports rose 8% year-over-year to 543,728 TEUs, while exports increased 6% to 121,507 TEUs, although "there's concern among ag sector and other exporters about the impact of trade policy on American goods headed overseas," Seroka said.

But import volumes are expected to fall in the fourth quarter, according to Seroka and Rogers, and much of the briefing was about why the decline might occur.

"I do see a decline in cargo volume again. The comps last year were pretty elevated," Seroka said. "We've brought in a lot of inventory ... Going back to the earliest part of the year, when we said we'd probably see a 10% decline in overall cargo coming through the Port of Los Angeles, we're going to track with that right now."

However, the one variable that could change the port's outlook is if U.S. trade policy changes again to compel more imports, Seroka said. Rogers, meanwhile, pointed to shifting and seemingly unpredictable political motivations underpinning tariff increases on goods from Brazil and India.

"I do think there is somewhat more certainty than there was, but it remains to be seen if those trade deals are going to be changed again," Rogers said.

While uncertainties over the direction of U.S. trade policies have caused many businesses to adopt a wait-and-see approach, uncertainties also have influenced the types of imports that might get preference, according to Rogers.

"One of the things that's interesting is, where do you bring [imports] in from, and are you bringing in components versus finished goods?" Rogers said. "We've seen an uptick in finished goods coming in versus components, partly because right now, the tariffs are heaviest on the components."

If the choice was to import steel and aluminum to build a car or import the Japanese car itself, "you're probably gonna go with the Japanese car," Rogers continued.

The challenge in multiple extensions of the pause on tariffs on China is that it can become a betting game for importers, Rogers said. But by holding off on increasing imports, companies may face costs in other areas, he said.

According to a logistics managers index survey that Rogers helps to oversee at Colorado State, the effects of the tariffs within the supply chain are primarily occurring upstream on the warehousing network via higher costs to hold onto inventories.

"Do I bet the tariffs are going to go away, or at least, kind of be delayed, and I'll just keep bringing things in as normal, or do I bet that they're going to be big? And if I'm betting they're going to be big, I'm making up that in other costs, on storage costs," Rogers said.

He continued: "It'll be very interesting to see what happens next. I would expect we have a quieter period at the ports. I mean, we'll still have some flows, but I don't think we'll see the sort of traditional peak season spikes, partly because everything is already here for the holiday season.

"What's going to be very interesting is to see when the revamp happens ahead of things like Chinese New Year, because we don't have enough goods pulled in to just last in perpetuity. We're going to need to bring more stuff in."

Seroka and Rogers aren't the only ones who expect import volumes to slow for the remainder of 2025.

Separately, Peter Sand, chief analyst at Norway-based freight market intelligence firm Xenata, said he sees the further 90-day extension of current tariff levels between the U.S. and China as not having a significant impact on shippers -- which means that there shouldn't be another cargo rush as seen when tariffs on China were lower in mid-May.

“Shippers have already embraced the first 90-day window of opportunity to frontload goods -- there is no longer a pent-up demand to get goods into the US, so spot rates are expected to decline further in the coming weeks as capacity also increases," Sand said in an Aug. 13 update posted online, noting that the tariff pause seems to be producing a temporary "stabilizing" effect.

Meanwhile, Flexport experts on the company's Aug. 14 webinar on the freight market also remarked on a seemingly stabilized market. That's because, as the Port of LA briefing alluded to, inventory levels are sufficient, with many companies adopting a sit-back-and-wait approach.

"It seems like everybody's response is basically tied to their inventory levels. The one [thing] I would say, though, is, I do see about a third still evaluating the impact," said Nathan Strong, Flexport director of ocean trade lane management, referring to a customer survey conducted by Flexport. However, "there's a calmness and not necessarily a panic."

"We have found a lot of customers are taking it easy and not making any sort of quick decisions ... until things settle," said Kyle Beaulieu, who is senior director at Flexport, where he monitors ocean procurement and trans-Pacific activity.

Beaulieu observed that the peak season for imports already has passed, as ocean rate levels for August and September have flatlined or decreased.

Air freight rates, meanwhile, "have pretty much followed the ocean pattern," said Konstantina Georgaki, Flexport director of ocean platform partnerships, adding that "if the tariff environment blows up in multiple locations and a lot of shippers start to rush at the same time, that might create pockets of mini-peaks."