Business

Shift in China-U.S. trade is hurting California, helping Texas

Published

2 years ago

March 11, 2024

Shift in China-U.S. trade is hurting California, helping Texas

WASHINGTON —

As if it weren’t worrisome enough for California that more highly skilled, highly paid workers have been leaving for Texas, evidence shows that the Lone Star State has begun to siphon trade dollars and uncounted jobs away from the Southland’s ports and the distribution hubs in the Inland Empire.

And the apparent cause of the new wrinkle in the Texas-California rivalry is not some new policies or programs adopted in Texas to make it a greater magnet for economic activity that was previously in California. Instead, it’s a consequence of the U.S.-China trade war that began when Donald Trump occupied the White House and has continued with President Biden’s efforts to reduce American dependence on China, especially for high-tech products that involve national security and other issues.

To get around the U.S. tariffs and trade restrictions, Chinese companies have sharply stepped up investments into Mexico and been moving products into the United States by truck instead of shipping by sea through the massive port and distribution systems in Southern California.

The ports of Los Angeles and Long Beach are the busiest in the nation and handle about 40% of all ocean cargo from Asia. But last year the number of 20-foot-equivalent containers from China entering the San Pedro ports complex fell a combined 12.5% from 2022, to the lowest level in at least a decade, according to data from S&P Global Market Intelligence.

“If we’re doing less business, it means fewer jobs, quite simply,” said Gene Seroka, executive director of the Port of Los Angeles. He said that every four containers translate into one job. “Economically, where all of us spend our money, if we don’t have this cargo coming through, it will be less — and there will be choices to be made.”

China’s share of all containers entering the Port of L.A. still remains dominant, at 53% last year, although that’s down from 57% in 2022. Seroka sees that percentage slipping to the mid-40s in the coming years.

The Southland’s cargo volume, overall, has picked up significantly in recent months, thanks to the end of labor contract talks and diversions to the West Coast due to military conflict and drought disrupting the Suez and Panama canals, respectively.

But longer term, Seroka said a dwindling of Chinese inbound containers has to be made up elsewhere. In addition to some 15,000 longshoremen, the two ports support hundreds of thousands of jobs in the region — in trucking, warehousing, trade finances and countless small businesses.

California’s stringent environmental regulations and high business costs add to the pressure.

To be sure, increased Mexican imports also benefit Southern California, which historically has gotten a large volume of overland trade, particularly electronic products coming up the San Diego border. But the biggest entry point for Mexican goods is Laredo, Texas, just north of the big manufacturing center in Monterrey, Mexico, and then El Paso, close to Juarez.

“Since more and more goods are coming from Mexico, Texas is geographically and conveniently located,” said Sung Won Sohn, an economics professor at Loyola Marymount University.

Tom Fullerton, a border business economist at the University of Texas in El Paso, said a lot of things made in Mexico are intermediate components, many of which go back and forth across the border as many as a dozen times. Some 90% is transported by trucks. No wonder employment for truck drivers in Texas has been growing nonstop, while California’s has come to a screeching halt, according to the U.S. Bureau of Labor Statistics.

“Increased Chinese investment simply creates more business opportunities for firms in Texas,” Fullerton said.

At the moment, trade economies in both Texas and California face some head winds, including a slowing U.S. economy as a result of anti-inflation efforts, plus cutbacks by retailers and other buyers that overstocked merchandise even as American consumers have been shifting their spending from stuff to services, such as travel and entertainment.

“Now that we filled the house with everything, everything we could wear and use for years, they’re saying, ‘Let’s go to the movies, the ballgame,’” said Jock O’Connell, a California trade specialist at Beacon Economics. “U.S. demand for imported goods from anywhere is slacking.”

Last year U.S. imports of all merchandise from China, by ship and air, fell by a whopping 20% from 2022, to $427 billion. The Commerce Department reported Thursday that Chinese imports in January were up slightly from December, but down 6% from January 2023.

Meantime, U.S. imports from Mexico continued to rise in January and compared with a year earlier, extending the lead over China. Mexican imports jumped after the worst of the pandemic passed and reached $476 billion last year. It was the first time in more than two decades that Americans bought more merchandise from Mexico than China.

Overall, the U.S. trade deficit of all goods and services fell last year by almost 19%, the largest drop since 2009, as Americans bought less foreign oil and fewer China-made phones, toys and household goods. In January, the trade deficit increased, to $89 billion, as American exports were lower than December and year-earlier figures.

Efforts to diversify production away from China have been going on for years, in part as a hedge against political risks and rising labor and business costs in China. But the move to Mexico and some other nations gained speed after then-President Trump in 2018 slapped large tariffs on a wide array of Chinese imports.

President Biden hasn’t lifted them, and in some ways further tightened the trade screws on China. The pandemic added to the so-called reshoring or near-shoring momentum as multinationals, stung by a breakdown in transport and supply chains, sought to be closer to their markets.

Harry Moser, founder of the Reshoring Initiative to bring manufacturing back to the U.S., said the changes in trade volume by country don’t tell the full story. Although he called the drop in the American trade deficit with China last year a good thing, Moser questioned whether the U.S. is really less dependent on China.

What’s happening, he argued, is that there’s considerable rerouting of trade from China through Mexico. And he fears it could get worse, pointing to the Chinese firm BYD’s plans to build an electric vehicle factory in Mexico for export to the U.S. Even Tesla, which makes its cars in Shanghai as well as Texas, is apparently urging some of its Chinese suppliers to locate in Mexico, he said.

“It’s not time to celebrate the China news,” Moser said of the reported drop in Chinese imports to the U.S.

Apparently there’s no cause to celebrate in the Southland either.

Chinese automotive parts companies have been among the most aggressive in stepping up investments in Mexico. Thirty-three car parts suppliers of Chinese origin are now registered in Mexico, and 18 exported $1.1 billion worth of products to the U.S. last year, up 15% from 2022, said Michelle Sagrero, communications manager at INA, the auto parts industry association in Mexico. She said more Chinese investments are in the works, though she said it was too early to disclose how many companies.

Overall, Chinese foreign direct investment, while stalling in the U.S., has kept growing in Mexico and topped $2.5 billion in 2022, a fivefold increase from 2000-04, according to Red ALC-China, a nonpartisan network of academics in Mexico and other countries. The tally for Chinese investments in 2023 hasn’t been published yet, but “it’ll be substantially higher,” said Enrique Dussel Peters, coordinator for the Center for Chinese-Mexican Studies at UNAM, a university in Mexico City.

The U.S.-China trade war has undoubtedly played a big role, he said. In his study for a United Nations economic group, Dussel Peters found that in 2021, companies exporting goods from China to the U.S. paid 18.8% of the value of their shipment in tariffs and transportation costs. The comparable costs for Mexico-originated exports to the U.S. — 1.05%.

“The difference is substantial, to put it politely,” he said.

Dussel Peters said he expects more Chinese and other foreign companies to invest and set up shop in Mexico. Mexico has free trade pacts not only with the U.S. but also a few dozen other nations, and it has its own sizable domestic market too. But he noted that there is one potential hitch. Thus far, Washington hasn’t come down hard in pressuring Mexico to follow the U.S. on China trade and investments.

“There is always the threat that the U.S. becomes more serious about complying with U.S. regulations and restrictions,” Dussel Peters said. “You can’t continue with a trade war and profound conflict and have a major partner of the U.S. with a sign saying to the Chinese, ‘Welcome to Mexico.’”

Business

Read Nick Bilton’s Letter to Scott Pelley

Published

6 hours ago

June 3, 2026

Press Room

Read Nick Bilton’s Letter to Scott Pelley

Dear Mr. Pelley:

I meant what I said in my letter last week to the 60 Minutes team: joining 60 Minutes is the honor of my career and I am grateful to be working alongside the people who have contributed to the most important television journalism brand this country has ever produced. While I’m new to 60 Minutes, I’ve devoted my career to investigative journalism and storytelling. I started this job excited to collaborate and to benefit from the wisdom and experience of the 60 Minutes veterans, with you among them. For that reason, one of the first things I did in my new role was call you to talk and invite you to dinner. It is a profound disappointment that you rejected that overture and chose ambush instead. Yesterday, you hijacked my first meeting with staff to disparage me, my qualifications, and my intentions with remarkable incivility and contempt. I welcome a diversity of viewpoints and respectful debate among the team, but this was nothing of the sort. Yesterday’s performative display of hostility enacted in front of the staff instead of in a civil, private conversation-demonstrated that you have no interest in contributing to the future success of the show, or approaching my new tenure with a mind open to collaboration and progress. I am here to deliver first-in-class news programming, not to make headlines about newsroom drama. I am eager to work alongside those who share this goal.

Despite yesterday’s misconduct, I had hoped that in sitting down with you today we could find a path forward together. You made clear that you are not interested in such a path.

Your antipathy to the future of the show has come through loud and clear. And I have heard you. I therefore write on behalf of CBS News, Inc. (“CBS”) to inform you that your employment with CBS is terminated for cause effective immediately. Enclosed is your formal termination letter.

Sincerely,

Nick Bilton

Executive Producer, 60 Minutes

Business

Aspiration co-founder sentenced to 14 years for fraud

Published

7 hours ago

June 2, 2026

Press Room

Aspiration co-founder sentenced to 14 years for fraud

The co-founder of Aspiration, Joseph Sanberg, was sentenced to 14 years in prison on Monday after defrauding investors and lenders of over $248 million.

The startup, an eco-friendly digital banking company boasting fossil fuel-free investments, carbon offsets for gas purchases, and a debit card with cash-back benefits for shopping at clean companies, was founded by Sanberg and Andrei Cherny. Cherny left the company in 2022 and has not been charged.

Sanberg, an Orange County native, pleaded guilty to wire fraud in October after being arrested in March last year. Aspiration subsequently filed for bankruptcy and liquidated all of its assets by July.

Sanberg and venture capitalist Ibrahim AlHusseini, who also faces charges, together forged a series of bank statements in order to obtain loans. From 2020 to 2021, the pair forged AlHusseini’s bank statements to show millions of dollars in assets in order to obtain millions of dollars from lenders.

Additionally, they forged a letter from their audit committee stating that $250 million in funds were available, when in reality Aspiration had less than $1 million. The amount of loans defrauded exceeded $248 million.

In 2021, Sanberg artificially inflated Aspiration’s 2021 revenue by $44 million by recruiting 27 fake customers to sign letters of intent pledging tens of thousands of dollars per month for tree planting services. Sanberg himself funded the contracts and used the inflated revenue numbers to obtain more loans.

The charges sparked an NBA investigation into salary cap allegations due to Aspiration’s connections with Clippers owner Steve Ballmer.

Ballmer personally invested $60 million in Aspiration, all of which was lost. He is now the target of a civil lawsuit alleging his participation in the scheme. Ballmer denies the allegations.

The team announced a $300-million sponsorship deal with Aspiration, and Clippers player Kawhi Leonard signed a four-year, $28-million marketing contract with the company, which reportedly performed no duties. The issue has raised concerns about how players are circumventing the NBA’s salary cap.

The team lost the $300-million sponsorship deal and an additional $20 million paid for carbon offset purchases.

Business

Monterey Park takes landmark vote on banning data centers

Published

18 hours ago

June 2, 2026

Press Room

Monterey Park takes landmark vote on banning data centers

Residents in the city of Monterey Park will be the first in the nation to vote on a permanent ban on data centers Tuesday.

If approved, Measure NDC would prohibit data centers within the city limits and could only be overturned by another vote.

Yard signs saying “No Data Center” in English and Chinese with images of dragons line sidewalks in the San Gabriel Valley city.

As a wave of data center opposition sweeps the country, numerous towns and counties across the U.S. have instituted temporary moratoria and other restrictions on the facilities. But only a handful have instituted indefinite bans, and just four other towns have sent related matters to the ballot.

Supporters are hoping the vote will set a precedent for the rest of the region, where residents are fighting proposals in Vernon and City of Industry.

“This is about as permanent a ban as we can get,” said Steven Kung, co-founder of the group No Data Center Monterey Park. “Winning Measure NDC would send a huge message to the rest of the San Gabriel Valley about how residents don’t want data centers.”

The ballot measure emerged from the fight against a 247,000-square-foot center proposed in 2024 by the Australian-owned investment firm HMC StratCap for a residential area in Monterey Park.

The facility would have sat less than 500 feet away from the nearest home and used three times the electricity of the 60,000-person, predominantly Asian American city.

While the developer touted the potential for jobs and tax revenue, residents expressed concerns about noise and air pollution, rising electricity rates and a potential to lower property values.

The company pulled its plans in late March following public outcry and a March 4 city council vote to extend a temporary data center moratorium and place a ban on Tuesday’s ballot.

In a letter to the city council, HMC StratCap said it would pursue a different use for the land and would not engage in a ballot measure fight.

The city council later banned data centers indefinitely, the first in California to do so, said Mayor Elizabeth Yang. But she’s still been out campaigning for the measure with all four other council members.

“If a council puts in an ordinance, a future council can reverse it too,” said Yang. “With the ballot measure, unbanning it is a lot harder because you need the entire city to vote on it.”

The measure proposes the ban “to protect air quality, drinking water resources, and public health” and “prevent impacts to electricity and water rates.”

While California places third in the country for existing data centers with about 300 facilities, it hasn’t been a hot spot in the recent AI-driven data center boom. High electricity rates, expensive land and regulatory hurdles mean that fewer, and smaller, facilities are currently planned than in Virginia, Texas, Georgia, Illinois or Arizona.

“Most of California’s data centers are small by today’s standards,” said Shaolei Ren, an engineering professor at UC Riverside who studies how to reduce the environmental impacts of data centers. “Ten years ago, they would be medium-sized, but the power demand for new AI data centers has increased a lot.”

The average operating data center demands 45 megawatts, according to the Washington Post, while the average planned one would draw 430 MW. The one proposed for Monterey Park would have required about 50 MW at peak demand.

As proposals crop up in SoCal, they’re met with fierce opposition. Montebello, El Monte and Baldwin Park have all enacted temporary moratoria, and Alhambra recently banned data centers as part of a zoning code update. City of Industry, Vernon, City of Commerce and Santa Fe Springs are moving in the other direction, trying to court developers and streamline data center approvals. Community groups are fighting that.

Outside the San Gabriel Valley, residents of Coachella and Imperial County are showing up in droves to protest local proposals.

Matthew Shaw, a volunteer with the Coalition for Responsible Data Center Development, who recently published a report on opposition to AI data centers, said a vote to ban them in Monterey Park “would lead to copycats, partially because so many groups are just opposed to any data center development at all.”

While there is no formal opposition to Measure NDC, some building trades like Ironworker Local 433 supported the Monterey Park data center when it was still live before city council. Those in the data center industry are lamenting the state of public opinion.

“These are multi-billion-dollar assets that are built by multi-trillion-dollar companies. These things will get done,” said Mehdi Paryavi, chairman of the International Data Center Authority. “My biggest problem is that our industry does not invest enough in community engagement.”

Paryavi said towns that seek to limit data centers are missing out on thousands of jobs generated by data center construction, operations and customers, as well as faster artificial intelligence speeds and better performance.

Kung said local community organizers are “looking at the empirical evidence” and seeing a ban as a win.

“We’ve never seen a city that embraces a data center and is like, ‘Look how our quality of life has increased, look how all the revenue has gone into citywide improvements,’” he said. “That just doesn’t exist.”