Trade dispute with China threatens US container exports

Trade dispute with China threatens US container exports

Port of Los Angeles.

Port of Los Angeles. Photo credit: Shutterstock.com.

This article has been updated to reflect China's decision to institute the tariffs starting Monday, April 2.
 
China’s initial retaliation for US President Donald Trump’s tariffs will affect some 85,000 TEU of US containerized exports, according to data from PIERS, a sister product of JOC.com.

Although this is only a tiny slice of the 12.5 million TEU in total US containerized exports last year, analysts warn that further retaliation by China is likely — and that it is likely to hit higher-volume commodities such as soybeans. China announced on April 2 that the tariffs take effect on the same day.

On Friday March 23, China announced plans for tariffs on $3 billion per year worth of US pork, recycled aluminum, steel pipes, fruit, and wine. The announcement came a day after Trump ordered tariffs on $50 billion of Chinese imports because of alleged intellectual property abuses, but was in retaliation to tariffs of 25 percent on steel and 10 percent on aluminum

Those tariffs later were waived at least through May 1 for shipments from the European Union and Canada, Mexico, South Korea, Brazil, Australia, and Argentina.

Even with the waivers, the steel and aluminum tariffs would affect shipments that comprised 0.9 percent of US containerized imports last year, according to PIERS data. Most of the 13.3 million tons of US steel imports last year moved by land transport from Canada and Mexico, or as non-containerized cargo in breakbulk ships.

Commodities for which China threatened retaliatory tariffs made up 3.1 percent of the 2.8 million TEU in total US containerized exports to China in 2017, PIERS data show. Aluminum scrap was the highest volume of those commodities, with 48,192 TEU last year. Pork and pork products were second at 18,644 TEU, followed by fruits and nuts at 15,887 TEU.

Ports with the largest shares last year of China-bound exports covered by the retaliatory tariffs were Los Angeles, with 13,424 TEU last year; Oakland, 19,999 TEU; Long Beach, 10,798 TEU; and New York, 9,053 TEU.

Most steel and aluminum shipments move as breakbulk cargo, but US ports handled 282,995 TEU of containerized steel and aluminum from all countries last year, and 212,324 TEU when the exempted countries were subtracted from that total.

US ports express uneasiness about Trump's steel, aluminum tariffs

US port officials have expressed uneasiness about Trump’s steel and aluminum tariffs and the possibility that they could spark a trade war that could affect US exports, including agricultural commodities and manufactured products.

Agricultural interests are especially nervous. Many ships that carry steel to ports on the US Gulf, Pacific Northwest, and Great Lakes carry bulk grain exports on the outbound leg, and there are rumblings about Chinese retaliatory tariffs on US agricultural commodities.

China’s Global Times, a newspaper affiliated with the country’s Communist party, published an editorial this week urging trade actions against US soybeans that it said receive “massive subsidies.” Nearly one-third of US soybeans are exported to China.

“Multiple reports indicate the Chinese have US soybeans squarely in their sights for retaliation, and this decision places soybean farmers across the country in financial danger,” Iowa farmer John Heisdorffer, president of the American Soybean Association, said in a statement. “It’s extremely frustrating to have the administration taking aim at our largest trading partner.”

Sixty percent of US soybean exports are shipped in bulk via the lower Mississippi River, primarily through the Port of South Louisiana between New Orleans and Baton Rouge.

In recent years, soybean exporters also have made increasing use of containers. Last year, US containerized exports of soybeans totaled 217,953 TEU, including 56,693 TEU to China.

Contact Joseph Bonney at joseph.bonney@ihsmarkit.com and follow him on Twitter: @josephbonney.