Digital Edition

August 20 2018

Issue link:

Contents of this Issue


Page 3 of 55

4 The Journal of Commerce | August 20 2018 Mark Szakonyi Letter From the Editor THE LATEST ROUND of tit-for-tat tariffs between the US and China is hitting the trans-Pacific trade, and although it's too soon to determine the impact on container volume of this wave and past ones affecting a range of goods including steel, the true costs of tariffs is coming into focus. Much of the industry's attention has been on the immediate impact of tariffs, affecting more than half of the 13.5 million TEU shipped between US and China in 2017, as Senior Editor Bill Mongelluzzo details in his Cover Story on US exporters looking for new markets. In addition to US agricul- ture exports being hurt, reports are flowing in of US manufacturers laying off employees or holding off on hiring because inputs are too costly. But beyond the headlines, the tariffs are making structural changes to the US economy that will impact consumer and export demand for the coming years. The changes come in many forms and vary in the degrees they can be measured, though they all show the potential long-term damage shippers face. Lost agriculture markets: The US agriculture industry's response to the Trump administration's plan for a $12 billion bailout to help tariff-hit farmers was mixed, at best, for good reason. The money is simply a Band- Aid to the formidable risk of farmers losing foreign buyer confidence for years, something ag exporters burned by the US West Coast port crisis of 2014-2015 well understand. Dampened business invest- ments: The stock market is still strong, with the MSCI global index of stocks up 2.8 percent and August on track for the best month since Janu- ary, according to Bloomberg News. But don't be surprised if companies start scaling back capital investment and hiring as the cost of tariffs bite. Thirty-percent of manufacturers polled by the Atlanta Fed said they are reassessing capital investment plans. That's a formula for reduced imports of factory equipment and inputs, and a further hit to consumer import demand. Fading tax gains: Similarly, the tariffs are eroding the benefits corpo- rations won via tax reform, according to the National Retail Federation and libertarian think tank The Cato In- stitute. Interestingly, the tax reform, which brought the corporate tax rate from 35 percent to 21 percent, will temporarily increase the US trade deficit, according to the nonprofit Tax Foundation. Higher housing prices: The auto industry has done a good job of scoping out the impact of steel tariffs, warning that vehicles will cost thousands of dollars more because of the tariffs on steel. Getting less attention but an equal if not greater drive of US imports, from building materials to appliances, is how the tariffs will increase the cost of homes. Buyers won't see the tariff impact until the wave of new home construc- tion begins next year, as builders have been forced to eat higher material costs of lumber for already contracted construction. The rolling impact of tariffs will keep coming, though shippers can take some consolation in knowing that, while the goods they ship face tariffs of up to 25 percent, the equip- ment in which they are shipped won't. Containers were one of five exemptions granted following a public comment period on $16 billion in tariffs that are set to take effect on Aug. 23 and complete the $50 billion in tariffs the Trump administration first floated in April. JOC The true cost of tariffs Executive Editor, The Journal of Commerce and JOC Events: Chris Brooks 609 649 2181, Executive Editor, The Journal of Commerce and Mark Szakonyi 202 872 1234, Managing Editor: Barbara Wyker 908 507 4802, Senior Editors: William B. Cassidy Trucking and Domestic Transportation 202 872 1228, Bill Mongelluzzo West Coast 562 428 5999, Hugh Morley Northeast, Mexico 646 679 3475, Eric Johnson Technology 213 444 9326, Janet Nodar Breakbulk and Heavy Li 251 473 2742, Greg Knowler Europe Editor, Maritime & Trade, IHS Markit +44 7976798770, Turloch Mooney Global Ports, Maritime & Trade, IHS Markit +852 9011 9109, Associate Editor: Ari Ashe Southeast Ports, Intermodal Rail 202 548 7895, Web Editor: Joseph Lazzaro 917 309 0148, Data Analyst: Dustin Braden 646 679 3450, Senior Content Editor: Alessandra Gregory Barrett, 860 248 5238 Senior Designer: Sue Abt, 862 371 3534, Designer: Bryan Boyd, 908 910 7849, Publisher: Tony Stein, 770 295 8809, Sales: Cindy Cronin, Strategic Account Manager Southeast, Gulf, Canada sales, 954 551 8305 Zachary Gorman, Account Executive Northeast, Illinois sales 646 679 3466 Jean Gibbons, Senior Sales Executive West Coast, Midwest sales, 706 469 7160 Ria Van den Bogaert, Sales Representative Europe, Middle East sales, +32 2 569 8905 Alex Remstein, Associate Sales Specialist Reprints/Classifieds/Copyrights, 646 679 3418 For Magazine Subscription Customer Service: 450 West 33rd St., 5th Floor, New York, N.Y. 10001 973 776 8660 • 800 952 3839 Executive Director, Editorial Content, Maritime & Trade, IHS Markit, Peter Tirschwell Executive Director, Media & Events, Maritime & Trade, IHS Markit, Amy Middlebrook Manager, Production, Carmen Verenna Product Manager, JOC, Jesse Case ©2018 The Journal of Commerce — All Rights Reserved For more information, visit our website, The Journal of Commerce The Journal of Commerce (USPS 279 – 060), ISSN 1530-7557, August 20, 2018, Volume 19, Issue No. 17. The Journal of Commerce is published bi-weekly except the last week in December (printed 25 times per year) by JOC Group Inc., 450 West 33rd St., 5th Floor, New York, N.Y. 10001. Subscription price: $595 a year. Periodicals postage paid at New York, N.Y., and additional mailing offices. © All rights reserved. No portion of this publication may be copied or reprinted without written permission from the publisher. POSTMASTER: Please send address changes to The Journal of Commerce, Subscription Services Department, 450 West 33rd St., 5th Floor, New York, N.Y. 10001. The rolling impact of tariffs will keep coming.

Articles in this issue

Links on this page

Archives of this issue

view archives of Digital Edition - August 20 2018