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July 9 2018

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July 9 2018 | The Journal of Commerce 27 Cover Story Special Report Trans-Pacific Carriers and Ports THE $34 BILLION in tari s China and the United States will levy on each other starting July 6 a ect 6.2 per- cent, or 830,095 TEU, of the total China-US container trade of 13.5 mil- lion TEU based on 2017 fi gures. US exporters will feel the biggest impact. The additional $16 billion in commodities that both sides are reviewing and adjusting would bring the total a ected trade to 8.1 percent, or 1.1 million TEU, according to an analysis of data from PIERS, a sister product of The Journal of Commerce within IHS Markit. The actions by both countries come as Russia, the European Union, India, Turkey, and Japan prepare to impose their own retaliation against US tari s on imports of steel and aluminum. Shippers, carriers, and other sup- ply chain participants are watching the tari s closely, but say the e ect on the market has been minimal, although that could change. "At this stage, we aren't hearing too much concern from our customer base on this issue," said David Bennett, president of Charlotte, North Carolina-based third-party logistics provider Globe Express, echoing a sentiment shared by other forward- ers, shippers, and truckers contacted by The Journal of Commerce. The US tari s target a larger volume of imports from China, but the Chinese tari s target a larger percentage of US exports to that country. The tari s from both coun- tries are equal to 25 percent of the value of the targeted goods. The total $50 billion in US tari s target 5.5 percent, or 734,877 TEU, of the US import trade from China, while China's tari s cover 12.8 per- cent, or 351,479 TEU, of US exports to the country. The revised lists of commodities A 1-2 punch A 1-2 punch The July 6 implementation The July 6 implementation of China-US tari s will be a major smackdown for US exporters will be a major smackdown for US exporters By Dustin Braden to be hit with tari s refl ect a 1.5 per- centage point increase from the original lists both countries released in April. The impact of the tari s on the trans-Pacifi c market is unclear. US imports from China rose 2.8 percent to 4.3 million TEU in the fi rst fi ve months of this year, down from the 7.1 percent increase in the same period of 2017. The window for booking a rush shipment by sea was tight given the tari s' unveiling on June 15, as the amount of time from then until the July 6 implementation is about equal to the time it would take to cross the Pacifi c Ocean, excluding the time needed to place an order, truck it to a port, and have it loaded onto a vessel. Although import growth has slowed, it's hard to say whether that's a ecting rates, as the SCFI spot rates on the Shipping and & Logistics Pricing Hub in May turned positive year over year for the fi rst time this year, and those year-over-year gains increased weekly in June. Rates had been negative year over year because of tough comparisons in the aftermath of Hanjin Shipping's August 2016 bankruptcy. The impact on the China-to-US trade is likely to be most pronounced in the air cargo market, where the much shorter transit time gives ship- pers the ability to book orders and get them to the US before July 6. In line with the United States' publicly stated goal of undermining China's "Made in China 2025" pro- gram to transition its manufacturing base to high technology goods, the US is targeting medical, surgical, dental, and veterinary instruments and appliances; computer parts and accessories; and solar equipment.

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