China To US Goods Shipment Jump After 90-Day Tariff Postponement: 'A Big Backlog Is Looming'

Experts are predicting a surge in the shipments of goods from China to the U.S. following the 90-day tariff pause, which could potentially spur economic activity in the term.

What Happened: According to Ryan Petersen, the founder and CEO of a supply chain management company, Flexport, ocean freight bookings from China to the U.S. increased 35% on the first day since the trade deal.

“A big backlog is looming; soon the ships will be sold out,” he added.

Louis Navellier from Navellier & Associates also backed this by forecasting that businesses were likely to load up on goods during the 90-day postponement window.

“In the short run, businesses will be loading up on goods during the 90-day postponement window, which will support employment and reduce the full impact of the tariffs on inflation, and longer term, we should see further announcements of expansion of U.S. manufacturing, which should support business activity and employment,” he said.

See Also: S&P 500 Rallies Over 3% On US-China 90-Day Tariff Truce, But Experts Warn It ‘Doesn’t Guarantee A Complete Resolution Of The Trade War’

Why It Matters: As the concerns about “empty shelves” rattled the businesses and the economists after the tariff announcement, a 90-day pause is a short-term relief.

According to the data highlighted by Torsten Slok, the chief economist at Apollo Academy, the inventory-to-sales ratio for retailers fell below the pre-pandemic level, sparking concerns about lower inventory as compared to the sales made by these retailers.

Slok explained, "In other words, retailers will more quickly have empty shelves when goods no longer come in from China."

However, the boost in goods ordered from China to the U.S. could help ease these concerns, as highlighted by Flexport CEO and Navellier.

Price Action: The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, jumped with joy on Monday. The SPY was up 3.30% to $582.99, while the QQQ advanced 4.07% to $507.85, according to Benzinga Pro data.

After Monday, all the indices were out of the correction zone. The S&P 500 index was down 4.93% from its record high of 6,147.43 points, scaled on Feb. 19. Dow Jones was 5.91% lower than its 52-week high of 45,073.63 points, and Nasdaq 100 was 6.09% lower than its previous high of 22,222.61 points.

On Tuesday, the futures of the Dow Jones, S&P 500, and Nasdaq 100 indices were trading lower.

Read Next:

• Cathie Wood Says AI Innovation In Healthcare Will Be More ‘Profound’ Than Autonomous Taxi Networks, Humanoid Robots

Image Via Shutterstock