US retailers signal strong imports despite tariff threats

US retailers signal strong imports despite tariff threats

Container imports at major US ports are projected to rise 3.9 percent in the first half of 2019, according to the NRF's Global Port Tracker report. Photo credit: Shutterstock.com.

Even though tariff fears reached a feverish pitch on Thursday following Trump administration threats to greatly expand tariffs on imports from China, containerized imports to the US are projected to increase 3.9 percent in the first half of 2019.

According to the Global Port Tracker report, published monthly by the National Retail Federation and Hackett Associates, “Retail container ports are expected to see unusually high levels the remainder of this spring through the summer.” The IHS Markit Shipping and Shipbuilding 2019 outlook in March is also bullish on imports, projecting an increase of 6.3 percent in the Asia-North America trade in 2019.

However, containerized imports so far this year have softened, decreasing 0.1 percent in the first quarter from Q1 2018, according to PIERS, a JOC.com sister company within IHS Markit. Import growth in April is turning out to be slow, based upon import figures released Thursday by the two largest US ports, Los Angeles and Long Beach. Los Angeles stated its imports in April were essentially flat, and Long Beach reported an increase of 1.8 percent over April 2018.  

The US-China trade war, which has been underway since last summer, could enter a new phase on Friday if the Trump administration increases the existing 10 percent tariffs on about $200 billion a year of imports from China to 25 percent, and then expands the tariffs at a later date to cover most merchandise imports from China.

Nevertheless, Global Port Tracker said the threat of tariffs is not impacting merchandise imports yet. “Much of this is driven by consumer demand, but retailers are likely to resume stocking up merchandise before new tariffs can take effect,” said Jonathan Gold, NRF vice president for supply chain and customs policy. March imports, the latest month for which NRF has actual numbers, were down 0.6 percent from February but up 4.4 percent from March 2018. Imports last March were impacted by the post-Chinese New Year factory closures.

Global Port Tracker estimates April imports will be 7.7 percent higher than April 2018. May imports are projected to be 4.2 percent higher, June 3.7 percent higher, July 3 percent higher, August 4.6 percent higher and September 2 percent higher year-over-year. Containerized imports in 2018 increased 6.2 percent over the record year set in 2017, according to Global Port Tracker.

However, import comparisons this fall will be benchmarked against especially strong imports last fall when US retailers and manufacturers front-loaded spring 2019 merchandise and components because the threat of 25 percent tariffs beginning Jan. 1, 2019, was still in play at that time. The front-loading caused US inventories to soar, and this is expected to affect trade volumes this spring as retailers and manufacturers work through their inventories.

Some forecasters project low single-digit import growth this year. TTX in March projected an increase of 1.8 percent in imports this year. Daniel Hackett, a partner in Hackett Associates, told a JOC.com webinar in April that imports will increase 2.5 percent in 2019.

The possibility of a further increase in tariffs adds uncertainty to projections on imports. Eytan Buchman, CMO of Freightos, on Thursday said the tariffs would impact a wide range of consumer items in a number of ways. “Trump’s tweet also included a threat to ‘soon’ apply a 25 percent tariff to the $325 billion ofimports that aren’t yet subjected to a tariff, which may trigger another round of front-loading,” he said.

Contact Bill Mongelluzzo at bill.mongelluzzo@ihsmarkit.com and follow him on Twitter: @billmongelluzzo.