Tariffs stirring fear at many US points of entry for imports

Updated 01 September 2018
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Tariffs stirring fear at many US points of entry for imports

NEW YORK: To understand why the impact of President Donald Trump's tariffs could be felt throughout the United States, consider this: From the West Coast to the Great Lakes and the Gulf of Mexico, at least 10 percent of imports at many ports could be hit by new tariffs if Trump's proposals take full effect, according to an exclusive analysis of government data by The Associated Press.
Ports and ground terminals in nearly every state handle goods that are now or will likely soon be covered by import tariffs. And port officials fear this could mean a slowdown in shipping that would have ripple effects on truckers and others whose jobs depend on trade.
Since March, the U.S. has applied new tariffs of up to 25 percent on nearly $85 billion worth of steel and aluminum and various Chinese products, mostly goods used in manufacturing.
"Tariffs are working big time," Trump tweeted recently.
The president has argued that the tariffs will help protect American workers and force U.S. trading partners to change rules that the president insists are unfair to the United States.
At the same time, his administration is preparing to slap tariffs of up to 25 percent on an additional $200 billion in Chinese imports — many of them parts and materials U.S. companies depend on, along with consumer goods — after a public comment period ends Thursday.
These tariffs are the administration's response to its charges that Beijing uses predatory tactics to try to supplant U.S. technological supremacy. Those tactics include cyber-theft and a requirement that American companies hand over trade secrets in exchange for access to China's market.
In New Orleans, port officials say a tariff-related drop in shipments is real, not merely a forecast. Steel imports there have declined more than 25 percent from a year ago, according to the port's chief commercial officer, Robert Landry.
The port is scouting for other commodities it can import. But expectations appear to be low.
"In our business, steel is the ideal commodity," Landry said. "It's big, it's heavy, we charge by the ton so it pays well. You never find anything that pays as well as steel does."
The port of Milwaukee imports steel from Europe and ships out agricultural products from the Midwest. Steel imports haven't dropped yet because they are under long-term contracts, said the port director, Adam Schlicht. But there has been "an almost immediate halt" in outbound shipments of corn because of retaliatory duties imposed by the European Union on American products.
Much of the corn, he said, "is just staying in silos. They are filled to the brim."
Many other ports have been humming along and even enjoyed an unexpected bump in imports during June and July as U.S. businesses moved up orders to ship before the new tariffs took effect. That started with manufacturing goods and is now spreading to retail items for back-to-school and Christmas.
"Some of my retail customers are forward-shipping the best they can to offset proposed tariffs," says Peter Schneider, executive vice president of T.G.S. Transportation, a trucking company in Fresno, California.
Port officials were encouraged by this week's announcement that the United States and Mexico had reached a preliminary agreement to replace the North American Free Trade Agreement, hoping it might lead to reduced trade barriers. Canada's participation in any new deal to replace NAFTA, though, remains a major question mark.
The port officials continue to worry, though, that Trump will make good on a plan to expand tariffs to an additional $200 billion in Chinese imports — a list that includes fish and other foods, furniture, carpets, tires, rain jackets and hundreds of additional items. Tariffs would make those items costlier in the United States. And if Americans buy fewer of those goods, it would likely lead to fewer container ships steaming into U.S. ports.
The impact will be felt keenly at West Coast ports like Los Angeles and Long Beach.
Los Angeles Mayor Eric Garcetti, relying on information from his port officials, said his port — the biggest in the United States — could suffer a 20 percent drop in volume if the additional $200 billion in tariffs are imposed against Chinese goods.
Jock O'Connell, an economist in California who studies trade, said he doubts a downturn would be so severe — that would match the slump that accompanied the global recession of 2008 — "but we will see a definite impact."
Eugene Seroka, executive director of the Los Angeles port, worries that "if tariffs make it too expensive to import, there will be an impact on jobs."
Seroka and others don't expect layoffs on the docks. Union longshoremen — whose average pay last year on the West Coast was $163,000, according to the Pacific Maritime Association, which negotiates for the ports — often have contract provisions ensuring that they are paid even if there's no work. And there are fewer of them than there were a few decades ago because the advent of shipping containers has reduced the need for people on the docks.
Dwayne Boudreaux, an International Longshoremen's Association official in Louisiana, said, though, that his stevedores are handling about 10 percent less steel from Japan because of the new tariffs.
"We don't think it's going to (get) worse," he said. But, he added, "who knows — that could change from the next press conference."
The impact might be greater on truck drivers and warehouse workers. Fewer will be needed, according to O'Connell.
Many drivers who deliver shipping containers from the dock to warehouses are independents contracted by trucking companies, and they don't get paid if there is nothing to haul. Some might leave the profession, said Weston LaBar, CEO of the Harbor Trucking Association in Long Beach, California.
"It's hard to retain drivers," he said. "If we don't have work for those drivers, we're worried they will leave for some other segment of the trucking business or go into another business, like construction."
Less shipping means less revenue for the ports — something that could limit their ability to pay for expansion and improvement projects, according to Kurt Nagle, president of the American Association of Port Authorities. He said U.S. ports are in the midst of a planned $155 billion in infrastructure spending from 2016 through 2020.
The current trade war was foreshadowed in January by steep U.S. tariffs on imported solar panels and washing machines. It exploded with the U.S. tariffs of 25 percent on imported steel and 10 percent on aluminum. Then came two rounds of duties targeting about $50 billion in imports from China.
Along the way, China, the European Union, Turkey, Canada and Mexico imposed retaliatory duties on U.S. goods including farm products and Harley-Davidson motorcycles.
On top of the $200 billion in additional Chinese imports that could face U.S. tariffs starting next week, Trump has said that if Beijing continues to retaliate, he may eventually slap tariffs on, all told, $450 billion in Chinese goods. That would be equal to nearly 90 percent of China's 2017 exports to the U.S.
Trade wars are usually temporary. President George W. Bush abandoned his steel tariffs after less than two years.
Milwaukee's port director worries, however, that damage from the current trade dispute could linger. Canada is increasing corn exports to Europe, and Brazil is trying to pick up the slack in soybean exports to China.
"Others are already picking up that business," Schlicht said.


Saudi Aramco discussing investments in India’s Reliance Industries

Updated 20 February 2019
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Saudi Aramco discussing investments in India’s Reliance Industries

  • World's biggest oil company targets petrochemicals
  • India is a top investment priority for Saudi Arabia

NEW DELHI: Saudi Aramco’s CEO Amin Nassar said on Wednesday that the company is in talks with India’s Reliance Industries for possible investments and is seeking other opportunities in the country.
Saudi Aramco signed an agreement in April with a consortium of state-owned Indian refiners to participate in a $44 billion refinery project on the country’s west coast.
“We are looking at additional investment in India so we are in discussions with other companies as well, including Reliance and others,” Nasser said in a panel discussion in New Delhi.
“We are looking at it. We are not limited to that investment which is the mega refinery,” Nasser said, referring to the west coast project, which would process 1.2 million bpd of crude and produce 18 million tons per year of petrochemicals.
Nasser is part of the entourage traveling with Saudi Arabia’s Crown Prince Mohammed bin Salman, who is in India for a one-day visit.
Reliance Industries, controlled by Asia’s richest man Mukesh Ambani, is India’s biggest refining and petrochemicals company and runs a 1.4 million barrels per day (bpd) refinery in western India. It plans to expand the capacity to 2 million bpd by 2030, according to plans shared with the Indian government.
Saudi Arabia, the world’s biggest crude oil exporter, is keen to expand further into oil refining and petrochemicals.
India would provide a fast growing market for oil and fuels and is already a steady buyer of Saudi oil.
“India is an investment priority for Saudi Aramco. India takes from us almost 800,000 barrels a day and by 2040 India’s total consumption will be around 8.2 million barrels per day,” Nasser said.
India is currently world’s third-biggest crude oil consumer with demand of 4.7 million bpd, according to government figures.
However, Aramco is already facing delays for the refinery project, planned for the western state of Maharashtra, as thousands of farmers have refused to surrender land for it.
Reuters reported on Tuesday the Maharashtra government is looking to move the refinery location.
Yousef Al-Benyan, the chief executive officer for SABIC, the Saudi Arabia-based petrochemical company that is the fourth largest in the world, was also on the panel. He said SABIC wants to expand its business and presence in India.