Cargo Ship Traffic from China to U.S. Drops 40%: What It Means For Gold

When you shop at Target, Walmart, or Costco, you probably don’t think much about the journey the items you buy have taken.

It turns out that things made in China can travel up to 10,000 nautical miles to arrive on U.S. soil. Cargo ships carry everything from laptops, smartphones, furniture, lamps, clothing, toys, sports equipment, shoes, and more to the U.S., eventually landing in your neighborhood stores.

Since early April, when the U.S. added a 145% tariff on goods imported from China, cargo ship traffic has slumped. About 40 cargo ships are en route from China to the U.S., but that number is down by about 40% just before the tariffs were instituted. Those ships carry about 320,000 containers, according to Bloomberg. That’s about a third fewer than just before the 145% tariff was set.

Looking ahead, cargo ship traffic could slow even more. In late April, Hapag-Lloyd AG, the world’s fifth-largest container carrier, stated that approximately 30% of bookings from China to the United States have been cancelled.

While the trade war is still young, and although the U.S. has said the tariff rate on China will come down, trade is slowing now.

What does this mean for you, the economy, and gold?

By the middle of May, thousands of American companies, even giant retailers like Target and Walmart, will need to replenish inventories. Experts predict we may begin seeing empty shelves at some of your favorite stores in a couple of weeks.

The U.S. is a consumer-led economy. By some accounts, consumer spending creates roughly 70% of our gross domestic product. For the economy, the math is simple. Fewer goods to sell means less spending, slowing economic growth.

What about gold? The precious metal has soared almost 30% since the start of the year, at least partly fueled in large part by safe-haven buying amid stock market volatility, concerns over a recession, and the impact of the tariffs on the economy.

The price of gold keeps hitting record after record, recently surpassing $3,400 an ounce, and it’s still climbing. Many on Wall Street, including J.P. Morgan and Goldman Sachs, expect gold to hit $4,000 by 2026. However, given how fast gold has been climbing, $4,000 could come even earlier.

While many Americans haven’t yet seen firsthand the impact of the trade war, it could be coming within a few weeks. Logistics experts warn that springtime is when retailers begin placing orders for back-to-school and Christmas inventory. In a typical year, the first holiday shipments would be hitting the water and starting that journey by mid-May. For now, many of those orders have been canceled or are on hold.

While the jury is still out on any tariff deal between China and the U.S., fewer goods are coming to our country now. While that may put a crimp in back-to-school shopping, it will continue to support the historic climb in gold prices. Do you own enough?

Want to read more? Subscribe to the Blanchard Newsletter and get our tales from the vault, our favorite stories from around the world and the latest tangible assets news delivered to your inbox weekly.