Protectionism and rhetoric escalate tensions in trade conflicts – SeaNews
Protectionism and fiery rhetoric continue to fuel tensions in the ongoing trade wars, particularly with the most recent actions taken by President Donald Trump. The latest move saw tariffs of 25% imposed on imported cars to the US, adding to existing tariffs on steel and aluminum. This escalation is expected to significantly increase automotive costs, with finished cars facing tariffs starting on April 2nd and car parts likely to follow suit in the near future.
These tariffs come on top of the 20% duties on all Chinese imports announced earlier, posing significant challenges for industries with intricate and interwoven supply chains. The complexity of modern production processes is exemplified by instances like piston rods being manufactured in Pennsylvania from Tennessee aluminum, exported to Canada for polishing, shipped to Mexico for assembly, and finally sent to Michigan for installation in engines.
Experts are predicting that these new tariffs could lead to increased costs, with some estimates suggesting up to $10,000 added to the price of certain cars in the US. President Trump’s oversimplified view that cars built in the US are exempt from tariffs fails to take into account the intricate global nature of modern supply chains.
The US Trade Representative (USTR) is exploring potential solutions to these challenges, with proposals to levy significant charges on Chinese-built ships every time they dock at a US port. This measure is a response to perceived market dominance and manipulation by China in the maritime sector. However, there are concerns that such penalties could lead to congestion at larger ports while disadvantaging medium and smaller ports.
Carl Bentzel, a former member of the Federal Maritime Commission (FMC), has highlighted the potential pitfalls of these penalties, suggesting that they could disrupt maritime services and distort port usage. He recommended imposing charges on a per-voyage basis to mitigate these negative impacts. Bentzel also advocates for investing funds from these charges into upgrading port facilities in Puerto Rico, exempting the island from penalties on Chinese shipping in a bid to attract manufacturing operations.
Bentzel’s concerns extend beyond the economic implications of China’s market dominance. He sees the vulnerability of global supply chains exposed by the COVID-19 pandemic as a call to diversify manufacturing away from heavy reliance on a single source. Puerto Rico, with its strategic location and potential for nearshoring manufacturing, offers a viable alternative to traditional manufacturing hubs like Mexico.
As tensions escalate, the US is exploring ways to bolster its domestic industries and reduce dependence on foreign goods, particularly manufactured in China. The current focus on implementing fines on Chinese vessels as part of Section 301 proceedings reflects a broader strategy to revitalize US industries, including shipbuilding, and protect American interests in the face of global competition.
By reestablishing a commercial shipbuilding industry and promoting manufacturing closer to home, the US aims to reduce its vulnerabilities and strengthen its position in the global market. The ongoing trade wars and protectionist measures are reshaping the landscape of international trade, prompting industries to adapt to a new era of uncertainty and disruption.