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The 90-Day Rush to Get Goods Out of China
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Good morning, CFOs. American and Chinese firms are racing to clear a backlog of orders during a pause in trade war hostilities; shifts in trade policy and worries in the bond market cast a pall over strong corporate results; plus, how the student-loan crisis will show up in the economy.
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Containers at a port in Taicang, Jiangsu province, China. PHOTO: AFP/GETTY IMAGES
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Sky-high tariffs pummeled U.S.-China trade and now the cease-fire is causing a snapback. Firms across the U.S. are racing to rebook canceled orders and find space on containerships to get products out of China and bring them stateside before the 90-day window closes in August.
In the week beginning May 12, when the trade truce was announced, bookings for containers to the U.S. from China more than doubled compared with the week before as the tariff rollback unleashed a wave of pent-up demand. Bookings surged to the equivalent of around 2.2 million 20-foot boxes, a level not seen in more than a year, according to data from Vizion, a container-tracking software company, and data provider Dun & Bradstreet.
Executives, logistics specialists and analysts are cautious about how big the rebound will get. They say there is still too much uncertainty over tariff policy and the health of the U.S.’s consumer-driven economy to fuel a splurge in new orders. Gene Seroka, executive director of the Port of Los Angeles, said earlier this month that he doesn’t anticipate a big surge in imports after the rollback. Vizion’s data show container bookings last week fell back to the equivalent of around 1.4 million 20-foot containers.
Nonetheless, many Chinese manufacturers are welcoming any bump in activity after the high tariffs froze orders and halted production. Lisa Wang, a salesperson at a textile manufacturer in China’s Zhejiang province, said the 90-day tariff pause has been a huge help to her company. The company has been able to ship out about a dozen containers of previously delayed orders, mostly mattress protectors and pillows. Clients are also placing some new orders.
“Because we don’t know what the policy will be like after 90 days, we are rushing to ship what we can now,” she said.
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Tuesday
Earnings: AutoZone
The Census Bureau releases the durable goods report for April.
S&P CoreLogic releases its Case-Shiller National Home Price Index for March.
The Consumer Board releases its Consumer Confidence index for May.
Wednesday
Earnings: Abercrombie & Fitch, Dick’s Sporting Goods, HP Inc., Macy’s, Salesforce
The Federal Open Market Committee releases the minutes from its early-May monetary-policy meeting.
Thursday
Earnings: Best Buy, Costco Wholesale, Dell Technologies, Gap, Hormel Foods, NetApp
The BEA releases its second estimate of first-quarter gross-domestic-product growth.
The National Association of Realtors releases its Pending Home Sales Index for April.
Friday
The Bureau of Economic Analysis releases the personal consumption expenditures price index for April.
The Institute for Supply Management releases its Chicago Business Barometer for May.
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What Else Matters to CFOs
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A healthy earnings season has helped stocks recover from a chaotic spring. PHOTO: JEENAH MOON/REUTERS
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Prominent U.S. companies have acknowledged the unpredictability of the trade-war economy by yanking or dialing back their financial forecasts.
Still, results from the past quarter show American corporations were on strong footing heading into April’s tariff escalations.
With the reporting season nearly done, profits from companies in the S&P 500 are expected to have risen about 13% in the first quarter from a year earlier, according to FactSet. At the end of March, analysts expected roughly 7% earnings growth.
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U.S. stock futures and European shares gained Monday after President Trump gave the European Union a temporary reprieve on new threatened tariffs.
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Millions of Americans had their student-loan payments put on pause during the pandemic. Now they are back on the hook again. For borrowers, this means that every month, money that they presumably used to spend elsewhere is going to pay off debt instead.
📰 Other headlines
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3,000
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The approximate number of jobs Volvo Car said it would cut as part of a wider plan to slash costs and become more efficient amid a challenging global auto market.
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The Wall Street Journal's CFO Journal offers corporate leaders and professionals CFO analysis, advice and commentary to make informed decisions. We cover topics including corporate tax accounting, regulation, capital markets, management and strategy. Follow us on X @WSJCFO. The WSJ CFO Journal Team comprises reporters Kristin Broughton, Mark Maurer and Jennifer Williams, and Bureau Chief Walden Siew. You can reach us by replying to any newsletter, or email Walden at walden.siew@wsj.com.
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