Wednesday, July 25, 2018

Caught in the Crossfire


Burgeoning US-China trade war causes uncertainty for exporters and importers.    

With the US-China trade war heating up, American companies and their supply chains are getting caught in the crossfire.

On July 6, the Trump administration imposed tariffs on $34 billion worth of goods imported from China, with the Chinese government immediately retaliating in kind. Another $16 billion in American tariffs on Chinese imports has been announced but still pending.

But the US has a plan to impose an additional $200 billion of tariffs, which would mean more than a third of inbound containerized trade with China would be subject to the levy, a sharp escalation.

China, as it does not import $200 billion in goods from the United States, has not yet announced how it will retaliate, but reports from Chinese ports give an idea. Imported products from the States that used to “sail” through Chinese customs are encountering vastly greater scrutiny and delays.

A Shanghai importer told Reuters that officials at the city’s port had put additional inspections, customs holdups and bureaucratic red tape. For any shipper, such snafus are maddening and expensive, but for time-sensitive and perishable cargo they can be ruinous. As an example, shipments of fresh American cherries that would normally have been cleared in a few hours have been held for 10 days to two weeks, resulting in the fruit spoiling in the shipping containers. More than half of all US cherry exports have been shipped to China.

While having allies working together in a united bloc would help to soften the impact of a trade war with China, the US is simultaneously pursuing trade disputes with Canada, Mexico, and the European Union. Overall, continuing down this path is likely to lead to rising prices and declining trade.

“It’s very difficult to see how this doesn’t negatively impact all Americans of every walk of life,” Matt Priest, president and CEO of the Footwear Distributors & Retailers of America, said in a statement when the tariffs were first announced. “The president claimed that trade wars are easy to win, but what our industry has always known is coming true: Trade wars are costly, unnecessary and do harm to the American economy.”

Kirk Shearer
President & COO
(973) 726-2103

TOTALogistix, Inc.

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