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June 10 2019

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10 The Journal of Commerce | June 10 2019 Cover Story Trans-Pacifi c container lines already are rushing to reduce vessel capacity, blanking sailings for June as eastbound spot rates to the US West Coast tumble. Air cargo rates between Hong Kong and North America spiked as benefi cial cargo owners (BCOs) looked to expedite freight from China, but it was to no avail, as cargo had to be en route by May 10 and arrive in the US by June 1 in order to beat the tari increase. IHS Markit estimates the impact of the announced tari s will cut global growth by 0.2 to 0.3 percent- age points, Behravesh said. That estimate would double, he said, if Trump follows through on a threat to impose tari s on another $325 bil- lion in Chinese exports to the US, a step that could draw further retalia- tion from China. Before the latest round of tari s, IHS Markit recently nudged up its 2019 global economic growth forecast by 0.1 percentage point to 2.9 percent. However, "the downside risks have once again risen," Behravesh said. "Both the global manufacturing and services PMIs compiled by IHS Mar- kit for JP Morgan dropped in April, highlighting this fragility." been sliding for fi ve straight months, according to the Cass Freight Index, making the possibility of economic contraction seem much more likely in the short-term, despite healthy consumer sentiment and record low unemployment. The re-escalating trade war be- tween the US and China will damage growth, both directly and indirectly, according to Nariman Behravesh, chief economist at IHS Markit, parent company of The Journal of Commerce. "Higher US tari s and Chinese retaliation will directly hurt growth in the economies of the two antagonists. This, along with disrup- tions in supply chains, will drag down growth in the emerging world." THE TRADE WAR between China and the US is casting a long shadow stretching from US ports to distribu- tion centers, truck terminals, facto- ries, retail outlets, and, ultimately, consumers in the US heartland. Higher tari s won't only a ect the price of imports and exports, but also when, where and how freight moves over the ocean, in the air, and on the ground. Economists and shipping indus- try leaders warn the US-China trade war could be a potential tipping point for a global economy that already was cooling before President Trump raised tari s on $200 billion in Chinese goods in mid-May. Alpha- liner, a maritime analyst, has down- graded its global container through- put growth estimate for 2019 from 3.6 percent to 2.5 percent. And the trade war is likely to make cooling US surface freight activity even chillier. US truck freight and intermodal volumes have By William B. Cassidy "Higher US tari s and Chinese retaliation will directly hurt growth in the economies of the two antagonists."

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