U.S. Ports Deliver a Reality Check on Trump’s Tariff Goals

Date: Thursday, August 29, 2019
Source: Bloomburg

A goal of President Donald Trump’s tariffs is to bring back factory jobs from abroad, rely less on imports and manufacture things at home again. Evidence is hard to find that it’s going according to plan.

U.S. port figures from January through June indicate supply chains are realigning as companies avoid higher American tariffs on Chinese-made products. But the rest of Asia — Vietnam especially — has been the big winner. 

Excluding shipments from China, all U.S. seaports posted an 11% rise in import volumes from around the world in the first half of the year and a 15% increase from Asia alone, according to figures from the Port of Los Angeles, a major gateway for trans-Pacific trade. Imports from Vietnam jumped 30% compared with the same six-month period in 2018. Imports from China fell 6%, the figures showed.

Where it goes from here is anyone’s guess as tariffs rise and hit more Chinese imports in the weeks ahead. The trends could change again if the U.S. economy downshifts, according to Bloomberg Intelligence analysts Lee Klaskow and Chris Muckensturm. That would take away “the only remaining bright spot for Asian exports” — which have already been losing momentum this year.

Some other interesting trends:

  • American exports to China through U.S. ports fell at four times the pace as imports in the first half, dropping 22%. The major shipments leaving the Port of Los Angeles for China include paper and paper waste, fabrics, animal feed, and scrap foam.
  • Chinese factories should be humming during the busy third quarter getting ready for the U.S. Christmas-shopping bounty. But this year some are more focused on finding new customers in Europe, the Middle East and Africa.
  • Klaskow and Muckensturm forecast a darkening outlook. “Optimism for quick recovery and material trade volumes rebound is unlikely, in our view. We see elevated risks to trade growth through 2020 amid decelerating economic growth and a worsening trade outlook, and expect downward revisions to the World Trade Organization’s 2.6% growth forecast for 2019.”

Charting the Trade War

China Drag

 

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