US West Coast ports brace for impact from bruising trade war with China

OAKLAND: Ports on the West Coast of the United States are bracing for a major impact as the country’s bruising trade war with China continues.

Around half of the goods that arrive at these ports from overseas are made in China, but the figure is expected to drastically fall as the tariff cycle continues.

Tit-for-tat escalation between the world’s two largest economies have pushed US levies on Chinese goods to a whooping 145 per cent and Chinese tariffs on American products to 125 per cent. 

GLOBAL MARKET VOLATILITY

The Port of Oakland, for instance, is the first US stop for millions of products arriving from China each year, as well as the last stop for agricultural products from California headed the other direction.

However, industry analysts believe the recent tariffs on goods means a slowdown at the port is almost certain.

“They've estimated that cargo volume will drop by about 10 per cent with the current level of tariffs,” said Sean Randolph, senior director of the Bay Area Council Economic Institute. 

“That's a lot for any port, and it has ripples going through the economy.”

At the East Bay Restaurant Supply warehouse near the port, prices for its products have gone up as soon as US President Donald Trump made it clear that tariffs were going to be imposed. 

The business sells kitchen goods, many of which are made in China, to restaurants and consumers. 

“Since the early part of this year, we've been receiving communications from our partners, from our vendors about the increase in prices,” said the firm’s chief financial officer David Wong. 

“When they pass down the prices to us, unfortunately, in this industry, we will pass down to the end-consumers.”

Recent data has shown that fewer ships are leaving China for West Coast ports, which adds to market volatility, said observers. 

But there is some hope that Trump may be backing down from his tough stance on Beijing, after his comments late last month that the tariffs could “come down substantially”.

In a statement to CNA, the Port of Oakland said it “is closely monitoring the evolving tariff situation which remains uncertain, especially regarding global countermeasures, deals and retaliation”. 

TRUMP’S “UNLAWFUL TARIFFS”

The Trump administration had earlier indicated that one of its key goals with its tariffs is to encourage domestic manufacturing. 

The strategy is based on the idea of reshoring where instead of using factories abroad, companies would build their products in the US. 

But experts believe that creates a dilemma for US companies that had already been reducing their reliance on China by moving their manufacturing to countries more closely aligned with Washington.

Bay Area Council Economic Institute’s Randolph questioned whether such firms’ efforts to move their production out of China have been in vain. 

He said: “(They thought) they were doing the right thing, they were diversifying, they were doing what the US government was asking”. 

California, which is home to the US's largest economy by a wide margin, recently became the first state to sue the Trump administration over the broad-sweeping tariffs.

This comes as global trade disruptions have the potential to leave the state high and dry.

California Governor Gavin Newsom said last month that the tariffs have already inflated costs, inflicted billions in damages and caused “immediate and irreparable harm”. 

“President Trump’s unlawful tariffs are wreaking chaos on California families, businesses, and our economy — driving up prices and threatening jobs,” he said. 

“We’re standing up for American families who can’t afford to let the chaos continue.”