August 15, 2019

ATA: Trump tariffs on intermodal containers would have cost logistics companies $63 million per year

Trucking trade group praises administration for withdrawing threat of added trade war fees on Chinese-made, 53-foot steel boxes.

By Ben Ames

The American Trucking Associations (ATA) said today that the American logistics industry has dodged a bullet, thanks to the Trump Administration's decision to holster its previous threat of slapping hefty tariffs on intermodal containers imported from China.

If the tariffs had gone into effect as planned, U.S. companies in the logistics sector would have been forced to pay an additional $63 million in the first year alone in order to procure the containers, which are the 53-foot-long, steel boxes that contain much of the cargo transported by trucks, trains, and ships, the ATA said.

"Trucking and trade are synonymous and we are happy with this most recent announcement by the U.S. Trade Representative that these 53-foot domestic containers won't be subject to tariffs," ATA Chief Economist and Senior Vice President for International Trade Policy Bob Costello said in a release. "We explained that applying tariffs to these containers would have a tremendous impact on the entire freight logistics industry, and ultimately on U.S. consumers, so we are very pleased with the decision."

The ATA says it told the USTR in June that the only two manufacturers of these kind of containers were located in China, so freight transportation companies would have no choice but to pay the additional cost because no domestic alternative existed. "Because there are no U.S.-based makers of these containers, we estimate the logistics industry would've paid an additional $63 million in the first year, and nearly $750 million more over the next decade for the equipment if these tariffs had not been rescinded," Costello said.

According to published reports, representatives of several supply chain service providers testified to a federal government working group this summer that boosting the price of shipping containers would trigger a hike in freight costs that would ripple through the economy and eventually hurt manufacturers, retailers, and consumers.

Retailers have consistently said they oppose the administration's policy of ratcheting up tariffs in a trade war, although they back the White House's ultimate goal of forcing China to change its alleged "unfair trade practices," such as requiring American companies to reveal their intellectual property in order to do business there.

The Trump administration said Tuesday it would delay its latest round of threatened tariffs on certain consumer products until Dec. 15, although it plans to go ahead with others on Sept. 1. The National Retail Federation (NRF) applauded that move, but said more flexibility is still needed.

"While we are still reviewing the details, we are pleased the administration is delaying some tariffs ahead of the holiday season and acknowledging the impact on American consumers. Still, uncertainty for U.S. businesses continues, and tariffs taking effect Sept. 1 will result in higher costs for American families and slow the U.S. economy," NRF Senior Vice President for Government Relations David French said in a release. "During this delay period, we urge the administration to develop an effective strategy to address China's unfair trade practices by working with our allies instead of using unilateral tariffs that cost American jobs and hurt consumers."

Another retail trade group issued a similar call to dial back the newest tariffs, saying the delay would merely postpone the economic impact on U.S. consumers. According to the American Apparel & Footwear Association (AAFA), 77 percent of all apparel, footwear, and home textile products imported to the U.S. from China—worth some $39 billion—will be hit with an additional 10 percent tariff on Sept. 1, and an additional 10 percent tariff on Dec. 15.

"By no means is this a win or a de-escalation," AAFA President and CEO Rick Helfenbein said in a release. "The administration is imposing an additional 10 percent tax on U.S. businesses and U.S. consumers. This is a tax that will hurt every American. Contrary to the headlines, the Grinch has stolen the Christmas selling season for our industry."

About the Author

Ben Ames
Senior Editor
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.

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