August 20, 2018

U.S. ports want tariff exemption on purchases of Chinese-built cranes

AAPA also seeks exemptions on other types of container-handling equipment.

By Mark B. Solomon

The nation's port authorities will ask the Trump administration to exempt any purchases of Chinese-built cranes used in port operations from tariffs that have been threatened by the Trump administration.

In testimony scheduled to be given on Friday before the U.S. Trade Representative, the American Association of Port Authorities (AAPA) will also ask for similar exemptions on any purchases of other Chinese-made cargo-handling equipment that would fall under the proposed tariffs.

Each container-handling crane cost, on average, $14.1 million. The impact of a 25 percent tariff proposed on Chinese imports will cost seaports millions of additional dollars that could otherwise be directed to infrastructure improvements, Kurt Nagle, AAPA's president and CEO, is expected to say. U.S. ports and their partners plan to spend about $155 billion between 2016 and 2020 on infrastructure improvements.

In its actions, the Trump administration has cited Section 301 of the Trade Act of 1974 which gives the president unilateral and discretionary power to force another country to end a policy or practice which violates international trade agreements or burdens U.S. commerce.The tariffs are designed to punish China for its alleged thefts of intellectual property and technology.

Nagle said that several U.S. ports have either ordered Chinese made cranes or are considering such investments. He did not mention any specific ports in his testimony. Cranes imported for port operations can be made entirely in China or are built elsewhere but with Chinese parts. Some crane models are not built in the U.S. There is only one experienced manufacturer for a special "low-profile" crane model specifically designed for ports located close to airports, and that producer is in China, according to AAPA.

Nagle's testimony will come during the fifth of six days of public hearings that began today in Washington on the proposed duties of up to 25 percent on $200 billion of Chinese imports. Unlike prior tariffs which hit more industrial and intermediate-goods, tariff opponents warn that this round will impact the costs of goods American consumers buy every day.

Nagle, in his testimony, will cite statistics showing that seaport cargo activity generates nearly $4.6 trillion in total annual economic activities and is responsible for more than $320 billion annually in federal, state and local tax revenues. For every $1 billion in export goods shipped through U.S. ports, 15,000 jobs are created, according to AAPA data that Nagle will cite.

The current tariff proposal, combined with prior U.S. tariffs imposed on China and China's retaliatory responses to date would cover 8.4 percent of trade through America's ports by value, AAPA said. In 2017, U.S. ports handled about $1.6 trillion of overseas import and export value, according to AAPA data. An additional $900 billion was handled in the domestic trades, the group said.

The California Association of Port Authorities estimates that the tariffs and Chinese responses to them would impact as much as 20 percent of containerized cargo imported throughout the state, representing $63.6 billion of trade value.


About the Author

Mark B. Solomon
Executive Editor - News
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

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