About Us Locations Services News Contact Us Careers Lee Connor Weighs in on the New Tariffs Go back Lee Connor Weighs in on the New Tariffs Author: Baltimore Sun 16-Aug-18 Lee Connor Weighs in on the New Tariffs Lee Connor, a freight forwarder and customs broker at the Port of Baltimore, says it’s too early to gauge the whole impact President Donald Trump’s tariffs on steel, aluminum and other products could have on trade through the booming shipping hub. But already, he says, he’s seen some effects. Connor, president of the century-old John S. Connor Inc., was making improvements to its warehouse at the port this year. Since Trump raised a tariff on imported steel in March, the cost of the project has risen: Connor’s contractor told him his pipe supplier had to raise prices by 17 percent. “The impact now is not huge,” Connor said. “But there’s a lot of concern about where this is going.” The Port of Baltimore saw a record 21.6 million tons of trade for $28 billion during the first half of 2018. But analysts say Trump’s tariffs, and retaliatory measures by China and other trade partners, will be a drag on that growth going forward — and one that could grow if the tit-for-tat escalates into a fully fledged trade war. While Trump has levied or threatened tariffs on Canada, Mexico and the European Union, he has focused his attention on China. Baltimore does not have the same exposure to a Sino-American trade war as West Coast ports, but if world commerce slows, it can still expect a hit to traffic. “The next quarter will be really telling, because the tariffs will be in full effect at that point,” said Daraius Irani, chief economist at Towson University’s Regional Economic Studies Institute. “Because the port is just a facilitator of exports and imports, anything that impacts world trade is going to impact the port.” Rep. Dutch Ruppersberger, who represents the port, worries that Trump’s rhetoric and moves could slow business at a facility that employs more than 13,000 workers directly and an additional 127,000 indirectly. “It’s like he’s playing a game of chicken with the global economy,” the Baltimore County Democrat said. “You can’t taunt trading partners and think there won’t be repercussions.” Ruppersberger says he supports efforts to push back against some of China’s trade abuses. But he said Trump is acting without a plan or any expertise in the subject. He doubts that “trying to bully China” — which ranks in the top five countries in both imports and exports through the port, for roughly $5 billion in trade annually — will work. “This is serious,” Ruppersberger said. “It’s nothing to fool with.” Tariffs are taxes on imports of particular products, generally imposed to make domestic products more competitive. But the costs are typically passed on to the consumer — as in Connor’s warehouse improvements — and they invite retaliation from trade partners. Economists warn of spiraling tariffs leading to all-out trade war. The Department of Commerce declined to answer questions about the tariffs’ actual or potential impact on American ports. A spokesman pointed to Trump’s recent remarks that tariffs were “creating tremendous numbers of jobs” in the U.S. steel industry and that “billions of dollars are pouring into the United States coffers” as a result. Neither the White House nor the U.S. Trade Representative responded to requests for comment. University of Maryland economist Peter Morici said tariffs on imported steel and aluminum do create jobs in those industries in the United States. And taxing imports unquestionably produces revenue. The Congressional Research Service reported that U.S. steel and aluminum tariffs brought in $1.4 billion in their first five months. Morici questions the value of raising trade tensions with U.S. allies, but he applauds Trump’s willingness to take on China. ”We really have a problem with China targeting a whole range of industries,” he said. “It’s ludicrous to think we can continue trading with them on the basis that we do.” Morici doubts Trump’s tariffs will have a great impact on trade. ”Longer term, unless we impose really broad tariffs on China, it’s not going to affect trade a whole lot,” he said. Maryland port officials so far are emphasizing the positive. “Our core businesses at the pubic marine terminals are growing,” Maryland Port Administration spokesman Richard Scher said in a written response to questions. “Our recently completed second quarter surpassed our first quarter this year as our best quarter ever.” Trump announced tariffs on imported steel and aluminum in March. Baltimore handles only about 2 percent of the country’s steel imports, Scher said. And while it handles about a sixth of U.S. aluminum imports, he said, it’s too early to say what the impact of the tariffs has been. Scher said the port had its best month ever in May for both cars and containerized cargo — two of the most lucrative sectors of maritime trade. The port’s containerized cargo business has skyrocketed since the widening of the Panama Canal allowed the outsized Panamax containerships to bring goods directly from Asia to the Seagirt Marine Terminal. Baltimore was one of the best-prepared ports on the East Coast for the giant ships. Scher said the port has not seen a reduction in that trade from trade tensions with China. He declined to speculate on what the impact would be if relations worsened. Connor says some of his customers are beginning to feel the impact of the tariffs on some $50 billion in Chinese imports. But he’s more worried about the proposed levies on $200 billion in products, including seafood, tires and chemicals that Trump is now considering for a 25 percent tariff. “That amounts to about half of our imports from China,” he said. “My concerns are the customers who are going to go out of business while this is happening.” Economist Anirban Basu, chief executive of the Sage Policy Group, said “we’re not facing anything catastrophic in the port of Baltimore” — but that does not mean the Baltimore port is fully insulated. If Sino-American trade relations continued to deteriorate, he said, the robust growth in containerized cargo to and from Asia aboard Panamax ships could be a point of vulnerability. Scher said the port has seen no reduction in its Panamax trade. Basu said Baltimore has benefited from what seems to be an easing of trade tensions with the European Union as Trump has focused his ire on China. Baltimore leads the nation in auto and light truck imports, and one of its largest customers is Mercedes-Benz. Trump threatened steep tariffs on German-made cars, but backed off in talks last month with European Commission President Jean-Claude Juncker. Whether he renews those depends on the progress of negotiations between his administration and the European Union. Should those talks stall, Trump could move forward with the tariffs on Mercedes and other European automakers — which would affect the port. “It would be a hit,” Irani said. A key question, he said, is whether American buyers of luxury cars such as Mercedes would be wiling to pay an extra 10 to 15 percent for the prestige items. Nationally, the sector hit hardest by Trump’s tariffs and Chinese retaliation is agriculture, and soy farmers on the Eastern Shore have expressed concerns. But agricultural exports are not a source of business in Baltimore’s port. Trump has offered $12 billion in aid to buffer the impact of agricultural tariffs on farmers, many of whom are in red states that supported him in 2016. Scher said he is aware of no similar help for ports, many of which are in coastal states that did not. Another area of potential exposure for the port is trade with Canada. Trump has threatened to discontinue the North American Free Trade Agreement with Canada and Mexico if changes aren’t made to his liking. Mexico isn’t a major player in Baltimore, but Canada is. “If those trade relationships deteriorate further, that could be deeply problematic for the port,” Basu said. Basu said port officials have few options to counter Trump’s tariffs or trade partners’ retaliatory measures. Baltimore’s port facilities have been built to accommodate certain types of cargo that could get caught up in trade disputes. “There’s not much the Port of Baltimore or users of the Port of Baltimore can do about it. There’s a lock-in effect because of all the fixed capital that’s in place,” Basu said. “It can only cross its fingers to some extent.” The year in tariffs January: President Donald Trump imposes tariffs of up to 30 percent on solar panels, a move that particularly affects China, and washing machines, which affects Mexico, China and South Korea. March: Trump proposes tariffs on $50 billion in Chinese goods, a 25 percent tariff on steel imports and a 10 percent tariff on aluminum from the European Union, Canada and Mexico. He threatens to increase duties on European cars. April: China announces tariffs on more than 100 U.S. products, including a 25 percent levy on pork and soybeans. Trump directs U.S. Trade Representative Robert Lighthizer to consider tariffs on an additional $100 billion in Chinese products. May: China cancels orders for U.S. soybeans. June: The U.S. releases a list of $34 billion in Chinese goods subject to an immediate 25 percent tariff. The Trade representative releases list of an additional $200 billion Chinese products that could face a 10 percent increase in duties. Mexico and the European Union impose tariffs on $3 billion in U.S. goods. India imposes tariffs on U.S. goods. July: Canada imposes tariffs on nearly 300 U.S. products worth $13 billion. China adopts tariffs on $34 billion in U.S. imports. The Trump administration announces $12 billion in aid to farmers affected by Chinese tariffs. Trump drops his threat of new tariffs against the European Union and agrees to negotiate. August: The administration imposes tariffs on an additional $16 billion in Chinese goods and doubles duties on Turkish products. Courtesy of The Baltimore Sun Subscribe for more news. Contact Us 799 Cromwell Park Dr A-G Glen Burnie, MD 21061 410-863-0211 About Us Locations Services News Contact Us Careers