China trade war top concern for U.S. seaports

Investment in U.S. port infrastructure and the creation of new port jobs is being threatened by uncertainty and delays in U.S.-China trade negotiations, according to the American Association of Port Authorities (AAPA).

“Our number one concern is China, and we’re very concerned about tariffs,” said Susan Monteverde, AAPA’s vice president of government relations, testifying at a U.S. House of Representatives Ways and Means subcommittee hearing on March 26.

“It’s the uncertainty issue – we have a lot of investment in infrastructure that [our members] want to make, but if they don’t know what agreement is going to be done and when it will be done, that’s the biggest job killer for the ports.”

Much of the focus of the subcommittee hearing, titled “Trade and Labor: Creating and Enforcing Rules to Benefit American Workers,” was on the structure of the pending new North American trade pact, renamed the United States-Mexico-Canada Agreement, which AAPA recently endorsed but has yet to be approved by Congress.

But with the Trump Administration under pressure to strike a deal with China that would remove tariffs and retaliatory tariffs, lawmakers were focused on that issue as well. U.S. Representative John Garamendi, a Democrat from California, told a recent panel session in Washington, D.C. that he wants U.S.-flag shipping requirements on oil and liquefied natural gas exports to be included in any U.S.-China trade pact.

When asked if it made sense to establish one-on-one trade deals with other Asian countries as a negotiating tactic with China, Monteverde noted it has been President Trump’s preference to negotiate bi-lateral agreements “and we think that’s fine,” she said. “Vietnam is a country that we have trade agreements with already. We understand the president’s concerns, but we would like [Chinese tariffs] solved as quickly as possible.”

A study released earlier this month by economists from the Federal Reserve Bank of New York, Princeton University and Columbia University found that tariffs imposed over the course of 2018 are costing American consumers $1.4 billion per month. The study also found that U.S. tariffs and resulting retaliatory tariffs were having a significant effect on supply chains.

“We estimate that if the tariffs that were in place by the end of 2018 were to continue, approximately $165 billion of trade per year will continue to be redirected in order to avoid the tariffs,” according to an abstract of the study. “Given the fixed costs associated with the current supply chains, this reorganization of global value chains is likely to impose large costs on firms that have made investments in the U.S. and China, as they have to move their facilities to other locations or find alternative sources of import and export destinations.”

Those changes could threaten trends revealing that U.S. ports are making significant contributions to the U.S. economy. Monteverde testified that from 2014 to 2018, the number of jobs supported by cargo moving through U.S. deep-draft ports increased 34 percent to nearly 31 million, according to a study conducted for the AAPA by port consultancy Martin Associates.

The Martin Associates study also showed total economic value that U.S. coastal ports provided in terms of revenue to businesses, personal income and economic output by exporters and importers rose 17 percent during that period, from $4.6 trillion to $5.4 trillion.