IAME 2019 CONFERENCE | ATHENS, GREECE
Paper ID 354

Yasuhiro AKAKURA
National Institute for Land and Infrastructure Management, MLIT
Graduate School of Management, Kyoto University
akakura-y83ab@mlit.go.jp

Impact Estimation of the Trade War between
the U.S. and China on Global Maritime Trade Volume
Objective
The U.S. Trump administration has progressed the countermeasure for trade deficit byimposing additional tariff rates based on Trade Act. China is the target of the Section 301 ofthe Trade Act of 1974. Steel and aluminum products are already the targets, also cars andtheir parts are the next candidates of the Section 232 of the Trade Expansion Act of 1962.
These additional tariffs induced the retaliation tariffs by China and other countries such as
Canada, EU, India and so on; consequently, some people say it is virtually a trade war.
Figure 1 shows the rate of additional tariff trades against the world international trades; therate is 2.4% on January 2019, there is a possibility that it will increase up to 6.6%. The
additional import tariff causes the decrease of trade and production of relating goods directly.
The decrease of production has ripple effects on domestic and overseas economy. Therefore,
the large increase of tariff rate has a big impact on the global maritime transport. Based on
this background, this study aimed to estimate the impact of the trade war on the global
maritime trade volume.
Steel and

Sec. 232Aluminum(Jun.'18)

Sec. 301

Cars andCar Parts(TBD)

First, Secondand Third Step
(Jul., Aug. and Sep.'18)

0%FourthStep
(TBD)

1%
2%
3%
4%
5%
6%
Rate of Additional Traiff Trades

7%

Figure 1 – Rate against the World Trades
Data/Methodology
The impact estimation was done by using SCGE (Spatial Computable General Equilibrium)
model: GTAP (Global Trade Analysis Project). This model has been developed mainly by
Purdue University, has a reputation for calculating economic impact of tariff change, and was
IAME 2019 Conference, June 25th-28th, Athens, Greece

1Impact Estimation of the Trade War between the U.S. and China on
Global Maritime Trade Volume
Paper-ID 354

used to estimate the impact of TPP (Tarns-Pacific Partnership Agreement) by the U.S. andJapanese government agencies. The data for estimation were arranged from 2011-year
economy on GTAP9 database. The country/area for calculation was aggregated in eleven,including the U.S., China, EU, Canada, India, Japan and so on. The sector was aggregated insix: primary, extraction, light, metal, heavy industries and services. The additional tariff rate
for each country/area and sector was calculated from the data of trade statistics such as USA
Trade Online, EU Market Access Database, UN Comtrade and so on, based on the list ofitems and their rates in the government releases of additional tariff. The estimation results
were the impacts on trade values, therefore their values were converted to maritime cargovolume by unit prices calculated using the data of USA Trade Online and PIERS (PortImport/Export Service).
Results/Findings-1,000-4%-2,000-8%-3,000-4,000

Scenario (2)0%Scenario (1)

0-12%
-16%

Volume Change Rate

Volume Change ('000TEU)

The estimation scenarios were as follows: (1) additional tariff till the increase of tariff rate ofthe Section 301’s third step, that was postponed from January to March 2019; (2) all theadditional tariff including cars and car parts of the Section 232 and fourth step of the Section
301. These scenarios included all retaliatory tariffs. It was estimated that the GDP, tradevalue and maritime trade volume of the U.S. and China would decrease greatly. As to thecontainer volume, the result of the estimation showed that the total volume of U.S. and China
will decrease in the range of 2.3 to 5.1 and 2.5 to 4.4 million TEU respectively in 2017-year
volume as shown in Figure 2; the volume of trans-pacific route between the U.S. andNortheast Asia, China, Japan, South Korea and Taiwan, will decrease 18 to 36%. The bulk
cargo volume of the U.S. and China will decrease in the range of 46 to 136 and 43 to 55
million ton, respectively.

◆-5,000JapanIndiaCanadaEUChina

U.S.

-20%

Figure 2 – Estimation Result of Container Volume

IAME 2019 Conference, June 25th-28th, Athens, Greece2Impact Estimation of the Trade War between the U.S. and China on
Global Maritime Trade Volume
Implications for Research/Policy

Paper-ID 354

If the trade war will escalate as expected, and this estimation result will become reality, thecargo carrying capacity of world ships will be likely to exceed the decreased cargo volume
greatly. The capacity of ultra large container ships, whose capacities are larger than
11,000TEU, on order book has accumulated about 40% of that of in service; the sudden
decrease of cargo volume will have a big impact in this situation. In addition, this result
indicates the shifting out of many multinational companies from China. Once, China became“the world’s factory” based on the lower labor cost and a huge market. However, in recentyears, the cost advantage has diminished, and many companies have added anotherproduction base to reduce overdependence on China; this movement is known as “China plusone”. This trade war between the U.S. and China is declining relative position of China, andthe factories making products such as smartphones, personal computers, apparels and so on
have been moving out. It may need long time for drastic change on a global supply chain,
however, in that case, the structure of the world shipping network will also change greatly.
Keywords: import tariff, container, bulk, global supply chain

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