U.S. based companies are feeling the economic pressures that are being caused by the latest rounds of Chinese trade sanctions and submitting their feedback, and the industry has scored an important victory in their negotiations in the exemption of shipping containers used by American businesses to transport their merchandise.
Why It Matters
According to JB Hunt and Schneider National testimony in the July 25 hearing, there are no American makers of the 53-foot intermodal shipping containers that the industry uses to transport their goods. However, these shipping containers were among 284 items listed in the latest round for 25 percent tariffs.
“Adding for a predictive growth of 7 percent, 21,000 53-foot containers will be added in 2018 assuming the average price of $12,000,” explained Daniel Drella, Schneider director of intermodal safety. “The imposition of a 25 percent tariff would cost the industry $64 Million…all of these increased costs in some manner be passed along to the end consumer, further exasperating economic inflation.”
The industry had taken the step of proving feedback in hearing to head of the impact that American companies and consumers would face from the inclusion of shipping containers in the Chinese trade war, including more than just Chinese goods.
More Than Just China
“Almost all US companies that ship from almost any volume of product, such as retailers and manufacturers, use intermodal transportation,” testified Kent Delozier, maintenance director at JB Hunt.
Therefore, American based shipping companies would require purchasing these shipping containers in order to transport any goods, which would impact those American companies that are using them for transportation of goods.
How Tariffs on China Hits Americans
Jeff Starin of Rostar Filters in Oxnard, California explained in Marketplace how tariffs on Chinese goods impact American companies, “We have to pay those tariffs up front no matter what…once this first round of tariffs went in, that duty was [$12,000] or $13,000 per shipping container…this puts an enormous financial strain on the finances of small family-owned business.”
Starin’s testimony related to the impact of 10 percent tariffs that go to 25 percent in January, causing further economic strain.
In response to the industry feedback at the hearing, the interagency working group granted an exemption for this and 4 other items from the original 284 items listed. So, shipping companies, suppliers, manufacturers, and retailers can breathe a little more freely.
–Jacques Piccard, Managing Director of DAVENPORT LAROCHE, Premiere Shipping Container Investing Company