News / US businesses 'highly concerned' over hit from tariff retaliation

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The US looks set reduce the tariffs imposed yesterday on Mexico and Canada – but tariffs are likely to remain rather than be suspended, according to US commerce secretary Howard Lutnick. 

In yet more trade whiplash for shippers, he said the US administration would “probably” say today that the tariff amounts would be cut. 

“I think [Trump’s] going to figure ‘you do more, and I’ll meet you in the middle some way’, and we’re probably going to be announcing that tomorrow,” he told media yesterday. 

Yesterday Mr Trump also outlined his plans for US shipbuilding in a speech to Congress. 

He said: “We are also going to resurrect the American shipbuilding industry, including commercial shipbuilding and military shipbuilding. And for that purpose, I am announcing tonight that we will create a new office of shipbuilding in the White House and offer special tax incentives to bring this industry home to America where it belongs.  

“We used to make so many ships. We don’t make them anymore very much, but we’re going to make them very fast, very soon. It will have a huge impact.” 

Meanwhile, his plan to charge operators of Chinese-built ships entering US ports has been ill-received by US shippers. 

Executive director of the Agriculture Transportation Coalition (AgTC), Peter Friedmann, told The Loadstar: “The AgTC  is 100% engaged in fighting the ill-conceived USTR section 301 proposed fees on Chinese-built and Chinese-owned ships. 

“This would be disastrous, not only due to the exorbitant fees that would be assessed on each ship owned by a Chinese company or built-in China, but also the unachievable mandates to ship US agriculture products on US-flagged and US-built ships. No suitable ships exist, so this would spell the end of a large percentage of US exports. 

“Our AgTC members are fully engaged in attempting to correct these misguided notions. This USTR proposal would destroy much of US agriculture without achieving its announced objective of restoring the US shipbuilding industry. 

“It is difficult to understand why in the midst of many sanctions being imposed on foreign countries, the USTR would now be proposing to impose sanctions on our own country.” 

AgTC would not be drawn to comment on the tariffs announced yesterday by China, which will see levies on $21bn-worth of US agricultural and food products. 

Others, however, have spoken out. At its conference this week, the US Airforwarders Association (AfA) called for caution and stability. 

“There must be stability to allow the logistics sector to plan and support US businesses,” said Brandon Fried, executive director. “Overnight changes, as in the case of the proposed 25% Colombian tariff, are damaging to the supply chain. 

“If reciprocal tariffs are put in place just as quickly, then a bilateral agreement may be harder to negotiate, and we risk placing ourselves in a position of import/export uncertainty.” 

More than 60% of AfA members are “highly concerned” over the new tariffs, said the association. 

“This could be trouble for the US economy, for the American consumer, and for air freight forwarders’ businesses,” said Mr Fried. 

Many argue that the tariffs are punitive in nature and will likely trigger retaliatory measures from trading partners. 

US retailers also expressed concern yesterday. In Best Buy’s earnings call, CEO Corie Barry said he expected the company’s vendors to “pass along some level of tariff costs to retailers, making price increases for American consumers highly likely”. 

Target CEO Brian Cornell told CNBC the company had been “working on this for quite some time”, and added: “I think for anyone in our space today, we’re looking for certainty. And hopefully over the next few weeks, we have a better understanding of how things are going to move forward, and we better react accordingly.” 

He explained that Target now sourced half its stock from the US, and had reduced Chinese imports from more than 60% to 30%, with a plan to cut it further, to 25%. But he warned consumers would likely see price rises over the next few days.