Tariff stockpiling wanes as importers work off inventories: Port executive

Monday, 18 November 2019 01:56 - - {{hitsCtrl.values.hits}}

FILE PHOTO: Containers are seen at the Yangshan Deep Water Port in Shanghai, China - Reuters

Reuters: The executive in charge of the No. 1 seaport for US trade with China on Tuesday said importers were not stockpiling goods ahead of President Donald Trump’s plan to slap 15% tariffs on cellphones, laptops, toys and other Chinese-made goods next month.

Last year, US importers rushed products from China to the Port of Los Angeles and other gateways to avoid such import duties – sending cargo volumes surging to record levels.

But volumes have softened as importers – who are grappling with excess goods and unexpected tariff-related costs – appear unwilling to take a similar bet ahead of the planned imposition of 15% tariffs on about $ 156 billion of Chinese products on Dec. 15.

“Our outlook for the fourth quarter is extremely soft,” said Gene Seroka, executive director of the Port of Los Angeles.

“We are not seeing any kind of advance like we saw last year in the third and fourth quarters because those inventory levels are not being worked down fast enough,” Seroka said.

Trump offered no resolution to the 16-month US-China trade standoff in a highly anticipated speech on Tuesday.

Importers are hoping for a deal that will suspend the Dec. 15 levies, said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation.

“Last year a lot of folks spent a lot of time and money advancing (imports) before the Jan. 1 deadline that ended up getting postponed six months ... They got hit with extra costs,” Gold said.

Trade with China accounted for roughly half of the nearly $ 300 billion in cargo handled by the Port of Los Angeles last year.

The Trump administration slapped the first tariffs on industrial components and technology goods from China in July 2018. China retaliated with devastating duties on soybeans and other US farm exports, and the US escalated the battle by targeting a broader swath of Chinese goods.

The trade standoff is taking a toll on the US manufacturing, industrial and transportation sectors, raising concerns about the US consumer economy ahead of the retail holiday season and next year’s US presidential election.

October imports and exports at the Port of Los Angeles each dropped 19% as the US-China trade war roiled global supply chains.

Seroka forecast a 10% decline in combined imports and exports for November and said, “December looks soft.”