Los Angeles city government did plenty to create its billion-dollar budget problem. Its elected leaders are so in thrall to public employee unions that departments grew too big and often paid too much in salaries and pensions. That’s smart politics but bad policy. The reckoning, now upon a city with an $800 million shortfall, will be painful.
But the city is not fully to blame. Indeed, much of Los Angeles’ current budget struggle is being inflicted by Washington, where a vain, incoherent president recklessly moves markets and economies with his public musings and punitive policies. His actions are dramatically compounding the burdens on local coffers statewide, and Los Angeles, where tourism and trade are major generators of economic life, is being hit especially hard.
Take the Port of Los Angeles, the main port of entry for trade with Asia. Some 40 percent of all imported goods pass through the LA and Long Beach complex. When the US president launches a trade war with China and the rest of the world, the port feels the impact, especially when the president’s China tariffs bounce from 10 percent to 20 percent to 25 percent to 104 percent to 145 percent to 30 percent — as they did over just the past three months.
That introduces chaos into the trade network as manufacturers and importers are left to wonder how prices today might be different tomorrow. Many elect to freeze and wait for signals of what the future may bring. Predictably, port traffic has plummeted, and officials expect a 30 percent dropoff this year.
For Los Angeles, that means a sharp decline in port revenue, as well as the broader effects of decreased business: dockworkers who see their pay decline, truckers with fewer goods to haul, maintenance crews with fewer ships and trucks to service. As their salaries drop, they buy less and the effects ripple outward. Toymakers feel the pinch, along with accountants and car dealers and barbershops and everyone else.
“The tariff may be aimed at China,” Los Angeles City Councilmember Katy Yaroslavsky explained to me, “but it hits in San Pedro.”
And the effect of those tariffs has struck both the port and Los Angeles International Airport. While cargo at the port has declined, tourism has plummeted as well — the result of uncertainty about costs as well as simple hostility toward the United States, which is suddenly demonizing longtime allies and partners.
Passenger traffic at LAX fell 7 percent in February compared to the same period a year prior, and fell again in March, off 5 percent from 2024. LAX revenues are predicted to rise modestly this year, but that’s only because it’s charging more in landing fees and building rents.
Trump’s bluster has affected foreign tourism across the United States, but it has had especially tough implications for Los Angeles. The three nations that provide the most tourists to Los Angeles are Mexico, Canada and China. Visits from all three have dropped in 2025, with Mexican tourism off 24 percent and Canadian visits down a whopping 74 percent, plunging in the face of President Trump’s repeated and condescending demand that our northern neighbor join the United States as its 51st state.
Overall, Yaroslavsky said the city of Los Angeles now projects a 25-30 percent decline in tourism for 2025. That means comparable reductions in the city’s share of hotel occupancy taxes. Restaurants, car services and tourist attractions all are braced for hits, too.
With Trump, the unpredictability of policy stems from the fact that he often seems driven by whatever is on his mind or whatever he most recently watched on television. That, too, complicates the lives of local leaders.
Earlier this month, Trump announced on social media that he was “authorizing the Department of Commerce, and the United States Trade Representative, to immediately begin the process of instituting a 100 percent Tariff on any and all Movies coming into our Country that are produced in Foreign Lands.”
That was news to Hollywood, and baffling news at that. What would it mean to impose such a tariff in a city where thousands of jobs depend on the movie industry? Would it protect American jobs or discourage movie production? Who knows? Certainly not Trump. And certainly not local officials trying to imagine how it might implicate their fiscal planning.
And that’s just the beginning of the Trump administration’s gifts to the city of Los Angeles and its residents. If his mass deportation plan ever kicked in at the level he promised (for all his bluster, Trump is deporting people at roughly the same rate as President Obama), it could, for example, ripple through the construction industry and significantly increase the cost and time required to build homes in a city facing fire recovery and the state’s worst homelessness crisis.
The plight of Pacific Palisades hinges on Trump in yet another way, too, as the administration continues to block disaster relief unless the city knuckles under to Trump’s insistence that it adopt new Voter ID laws in exchange. That has some impact on the city’s budget — city buildings and property were among the thousands of structures destroyed by the fire — but its greater effect is on residents, who are being held hostage in a way that victims of no other natural disaster in American history have ever faced.
Finally, there is the Trump budget. The administration’s “skinny” budget, a rough outline of its spending plan for the coming fiscal year that was released earlier this month, includes dozens of cuts that could affect city services. An analysis prepared by Yaroslavsky’s office identified 19 city programs that could face cuts, from support for homeless services to elimination of renewable energy credits. Dozens of more cuts could affect residents, her office found, just not through the budget.
All told, the effect of Trump’s actions has been to add tens of millions of dollars to the city’s shortfall, along with untold millions lost to uncertainty and confusion. It is, to say the least, discouraging, if not entirely surprising.
“For a guy who bankrupted four businesses,” Yaroslavsky said, “it’s very on-brand.”
Jim Newton, CalMatters