News / Port hopes rise after call for delay to 'unfair' US tariff on Chinese cranes

APM Terminals Port Elizabeth

US ports, facing millions of dollars in extra costs due to the 1 August 25% tariff on Chinese-made container cranes, may get a last-ditch reprieve.

The tariff, a little more than two weeks away, is likely produce some $131m in extra costs applied to several ports that have cranes under construction at Chinese handling equipment manufacturer ZPMC.

However, Jena Santoro, senior manager of global risk intelligence at Everstream Analytics, told The Loadstar there was increasing hope among port industry lobbyists that the US government may delay imposition of the new tariff.

“While they are not asking to reverse the tariff, they are asking if it could be delayed; and we think, based on what our sources are telling us, that there’s a strong chance that the 1 August deadline might be pushed out, or there is some sort of modification for those ports that have pending orders.

“The unfairness for ports that placed orders before the tariffs were even announced is one of the stalking points; another is the severity – to go from zero to 25% is quite a jump, especially with concerns that the extra costs may make US ports less competitive against Mexican and Canadian ports,” she explained.

The new tariff was announced by the Biden administration to encourage the development of domestic container handling equipment manufacturing. However, in a submission to the Office of the US Trade Representative (USTR), the American Association of Port Authorities (AAPA) claimed some 35 cranes were currently under construction in China to be delivered to US ports after 1 August.

“Assuming an average of $15m per crane (AAPA’s understanding from our membership), the new tariff would mean an additional $131.25m in unexpected costs, before factoring-in planned purchases over the next five or 10 years,” says the AAPA submission.

It asks USTR to take two actions to prevent these problems: “First, USTR should delay the effective date for the STS crane tariffs by at least two years, or ideally until there is a US manufacturer capable of providing the product domestically. This would serve the dual purpose of providing relief to ports that have already signed contracts and incentivising domestic production.

“Second, USTR should exclude STS crane purchases from the tariff for those ports that signed contracts to procure cranes prior to the publication of the new tariffs. This would put all ports purchasing STS cranes on a level playing field.”

The tariff announcement was accompanied by a federal $20bn investment plan to launch a new manufacturer in California in conjunction with Mitsui subsidiary Paceco. But Ms Santoro told The Loadstar: “There’s a lot of questions around whether this is even still happening.

“We believe the investment has already been made, but there have been no public announcements since, so it’s very uncertain. There are other crane manufacturers in the US, but they don’t make container cranes, and a company can’t change its production operations overnight,” she added.