- New trade tariffs on Chinese imports worth USD 200 billion, says US
- Includes more consumer goods like Christmas toys
- US move will affect 1.9% of global seaborne container trade
- Dry bulk commodities to be affected if the USD 200 billion list is implemented
- Chinese imports from US are less when compared to its exports
- 85.3% of Chinese imports likely to be affected which is more than US
- China must look elsewhere other than just tariffing US imports
In addition to the already long list of tariffed goods that was made earlier this year, many more commodities are likely to be affected.
On 23 August, as the US has proposed slamming tariffs on goods worth USD 200 billion, the tariffed goods’ share of global trade is underestimating the overall negative impact of this trade war on globalisation and international shipping.
BIMCO’s chief shipping analyst Peter Sand comments “85.3% of Chinese seaborne imports from the US and 58.5% of US seaborne imports from China could become affected by the trade war, if the US and China implement tariffs on a further USD 200 and USD 60 billion worth of goods respectively.”
This is equal to the impact on the container shipping industry which also sees 1.9% of total containerized seaborne trade affected.
Global container crisis
While containerized goods have already been targeted, by the USD 50 billion round, the biggest impact on these will come if the proposed USD 200 billion are implemented. So far, the tariffed goods total to 6.6 million tonnes of seaborne trade from China to the US in 2017.This is equivalent to 660,000 TEU (10 tonnes per TEU/global average), which amounts to 5.9% of US West Coast container imports in 2017. If you assume a lighter/heavier cargo per transported TEU or FEU, naturally the number of containers change accordingly.
They have latter raised the proposed tariff levels to 25%. This list covers more consumer goods than previously seen varying from bicycles to fish and Christmas lights, and will undergo further review before a decision is made about possible implementation.
Of the goods which already face tariffs, namely the targeted steel and aluminium commodities and the USD 34 billion worth of goods, most are dry bulk and container goods. 23.3 million tonnes of the affected steel and aluminium commodities were imported by the US via the sea in 2018. Dry bulk commodities will also be affected if the USD 200 billion list is implemented, with 4.1 million tonnes of the targeted commodities imported to the US from China in 2017, these goods include wood commodities and cements. In total the dry bulk goods affected by US tariffs are equivalent to 548 Handymax loads (50,000 DWT).
A further 22.4 million tonnes of seaborne containerized goods would be impacted by the US 200 billion list, which amounts to a further 20.1% of USWC imports in 2017, or 2.24 million TEU. In total, if this latest round of tariffs were also to be implemented, 1.5% of the global seaborne container trade would be affected.
Oil products have also been targeted with 0.5 million tonnes worth of this seaborne trade tariffed from 23 August with a further 0.7 million tonnes in the line of fire of the USD 200 billion list.
China – take diversion
The Chinese USD 16 billion list also came into force on 23 August 2018, a modified list compared to the original publication, with the removal of crude oil an important development. This revised list contains wood commodities as well as some coals and metals.
Following the publishing of the USD 200 billion list by the US, China responded by releasing four lists worth in total USD 60 billion, to be tariffed between 5% and 25%. This contrasts to the prior rounds of the trade war, where every retaliation has been of equal worth to the other party’s measure. However, the trade war has now reached a stage where China is unable to respond equally as it imports much less from the US than it exports.
In 2017 they imported USD 129 billion worth of US goods and having already targeted or proposed tariffs on USD 113 billion of US imports, China is fast running out of goods to tariff. This compares to the almost USD 506 billion worth of goods that the US imported from China in 2017, leaving them with more room for manoeuvre.
China has previously put tariffs on USD 3 billion worth of American goods, in response to the American steel and aluminium tariffs. These are primarily food, beverages, iron and steel products. The next retaliation from China came in the form of tariffs on a list of products worth USD 34 billion which entered into force 6 July, matching both the American date and list value.
By excluding crude oil imports from its USD 16 billion list, China has halted tariffs on 10.5 million tonnes worth of seaborne crude imports from the US. Instead the most recently implemented tariffs target mainly dry bulk goods, amounting to 22.2 million tonnes.
Impact on China
The largest ‘one commodity’ targeted by the trade war are US soybeans which as of 6 July 2018 face 25% tariffs when imported into China, but the impact of these on Chinese buyers may be limited. A fall in the price of US soybeans since the tariff’s implementation, has resulted in US soybeans being 21% cheaper than Brazilian soybeans (Source: Bull Positions), the second largest exporter of soybeans to China, thus eroding much of the added costs brought about by the tariffs.
The proposed USD 60 billion would also affect the dry bulk industry the most, with 10.5 million tonnes of listed dry bulk commodities shipped from the US to China. In 2017, 72.2 million tonnes of the involved commodities (both with tariffs implemented and proposed) were imported via the sea by China from the US. This represented 1.4% of total seaborne dry bulk trade in 2017 and is equivalent to 1,454 Handymax loads (50,000 DWT).
Did you subscribe for our daily newsletter?
It’s Free! Click here to Subscribe!
Source: Bimco
