The United States and China are poised to implement additional port fees targeting ocean shipping companies that transport critical goods, including holiday toys and crude oil. The U.S. will start collecting these fees on October 14. This action is a particularly pronounced step up in the growing trade fracas between the two countries. In a tit-for-tat response, China has started levying discriminatory taxes on vessels that are U.S.-owned, operated, built, or flagged. This most recent announcement signals the beginnings of a new chapter in the continuing U.S.-China trade war. It would have serious repercussions on newly established global supply chains and economic stability.
As both countries get ready to implement these new, increased fees, the effect on international trade stands to be enormous. The U.S. fees are explicitly aimed at vessels calling on U.S. ports. By comparison, China has exempted ships built in China from their levies. This move appears to be part of a broader offensive strategy. Both countries are escalating their positions in a deepening trade war characterized by the imposition of billions in tariffs and other retaliatory measures.
The Resumption of Trade Hostilities
Donald Trump has returned to the 47th President of the United States. His return to office has already ignited new battles over the trade war that began when he took office four years ago. Trump has committed to reentering the White House with 60% tariffs on Chinese imports. This promise marks his further commitment to the coming Republican primary China War, leading on a more intelligent/trade war.
The U.S.-China trade war took a short respite with the Phase One trade agreement signed in January 2020. Now, thankfully, it is poised to come back in full force. This deal aimed to achieve 2 well-defined structural reforms within China’s economic and trade regime. President Joe Biden kept the status quo on tariffs and even upped the ante by imposing more tariffs, which triggered more retaliatory terror from China.
Since then, China has retaliated with tariffs on products ranging from U.S. automobiles to soybeans. This ping-ponging has resulted in a constantly shifting and evermore confusing patchwork for businesses doing trade across state lines to navigate.
Economic Implications
The re-escalation of the trade war would be likely to have serious ramifications for the global economy. Analysts are anticipating a fall off in spending, particularly in the investment sectors. They are getting ready for higher costs brought on by the new port fees and the Administration’s tariffs. This catastrophic war which still rages on today is affecting the CPI directly. As such, consumers across the world are bearing the brunt of this inflationary storm.
Disruptions to global supply chains are likely to increase as shipping costs continue to climb and trade routes grow increasingly erratic. Importers and exporters are in a much more difficult position. These new tariffs and fees can create even more unpredictable and volatile financial projections.
“Hanwha Ocean’s U.S.-related subsidiaries have assisted and supported the U.S. government’s relevant investigative activities, thereby jeopardizing China’s sovereignty, security, and developmental interests.” – [Source not explicitly mentioned]
Future Outlook
As both countries still rake in more protectionist laws and tariffs, the future of U.S.-China relations seems bleak business-wise. Whether the effect of these changes will drive the parties back to the negotiation table or just deepen the rift remains to be seen. Related companies operating in the global maritime industry, trade and logistics need to stay on their toes to continuously shift their policies to lead in this changing tide.