Trade war drives first year-on-year drop in US imports from Asia in 10 years

Date: Monday, January 20, 2020
Source: Journal of Commerce

US imports from Asia saw a year-over-year decline in 2019 for the first time in a decade as the trade war drove an almost 10 percent drop in Chinese imports that easily bested growth in  sourcing from Southeast Asia. 

Imports are expected to decline further in January and February before turning higher in March, said Daniel Hackett, a maritime and trade consultant and co-author with the National Retail Federation of the monthly Global Port Tracker. But the growth this spring will be due more to the timing of the Lunar New Year celebrations in Asia, which will take place almost two weeks earlier than last year, rather than a surge in demand, he said.

In fact, Hackett expects stagnant import volumes in the first half of 2020, and a downtick of 1 percent in the third quarter. Depending upon how the US-China trade war plays out this year, Hackett does not anticipate a “return to normalcy” until the fourth quarter. “We hope that cooler heads will prevail,” he told Friday.

US imports from Asia last year fell 2.2 percent to 16.6 million TEU from 16.0 TEU in 2018, after increasing 7.6 percent in 2018 from the previous year, according to PIERS, a sister company within IHS Markit. Import growth had been pulling back for much of 2019 before turning negative in October. Imports from Asia declined 10.4 percent in October, 9.4 percent in November, and 17 percent from December from the same months in 2018.  

US imports from China were hit especially hard in 2019, declining 9.8 percent to 10.5 million TEU from 11.7 million TEU in 2018. Retailers and manufacturers last year, spooked by the trade war, shifted some of their sourcing from China to Southeast Asia; imports from Asia, excluding China, increased 14.8 percent in 2019, according to PIERS.

For the past 10 years, ports and carriers had assumed that import growth from Asia and China, the engines of the trans-Pacific trade, would continue uninterrupted. The last interruption in what had been steady growth in eastbound trans-Pacific container volumes since China entered the World Trade Organization in 2001 occurred during the 2008-09 global economic recession. Imports from Asia in 2009 declined 14.2 percent, while imports from China dropped 12.4 percent, according to PIERS data. 

Expectations for continuous growth were shattered by the imposition of punishing tariffs on imports from China that began in 2018 and were imposed in stages through much of 2019. Even this week’s “Phase One” trade agreement between the US and China is expected to provide only limited relief to importers of consumer merchandise because tariffs remain on about $370 billion of Chinese imports.

Tariffs hitting West Coast ports hardest

The tariffs have had an uneven impact on US coastal shares of imports from Asia and China. Due to their reliance on the vast Chinese market, West Coast ports are being hit the hardest by the trade war. West Coast imports from all of Asia declined 5.5 percent last year, while imports from China moving through the West Coast plunged 12 percent. 

As some sourcing shifts from China to Southeast Asia and the Indian subcontinent, all-water services from Asia to the East Coast through the Suez Canal become more competitive. Imports from all of Asia through the East Coast increased 2.6 percent in 2019, even though imports from China through East Coast ports fell 6.8 percent. East Coast imports from Asia excluding China increased 22.9 percent. By comparison, imports from Asia excluding China through West Coast ports increased 9.2 percent, according to PIERS.

Gulf Coast ports were the least affected by US tariffs on Chinese imports. Asian imports through the Gulf Coast have risen strongly the last three years since carriers began adding services in response to growing volumes in the region. Imports from all of Asia increased 14.3 percent in 2019. Imports from Asia excluding China surged 44.5 percent in 2019 from 2018, and imports from China edged higher by 2.3 percent, all due to the increased capacity carriers have added to the Asia-US Gulf trade lane.

Despite the tariffs, the West Coast remains the largest gateway for US imports from Asia, handling 10.3 million TEU last year. Asian imports through the East Coast totaled 5.4 million TEU, while imports through the Gulf totaled 796,167 TEU in 2019.


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