With US President Donald Trump partially relenting on his earlier announced plans to impose 10 per cent tariffs on virtually all remaining Chinese imports into the US on 1 September, one could be forgiven for thinking Christmas came early.
Although too early to tell, there is perhaps a modicum of hope of some form of a peak season this year, given that the items Trump chose to exclude, consist of cell phones, laptop and tablet computers, toys and video game controllers and a range of other consumer electronics – all items near and dear to the hearts of the air cargo supply chain.
Indeed, those four product categories – mostly air freight products – accounted for a combined USD 98 billion of Chinese imports in 2018, according to a Reuters analysis of US Census bureau data.
All-in-all, there is a 21-page-list – List 4B – of products that won’t get hit with tariffs on 1 September as originally announced. This covers everything from the consumer electronics already mentioned, to baby monitors and strollers, microwaves, instant print cameras, doorbells, high chairs, musical instruments, ketchup dispensers, baby diapers, fireworks, sleeping bags, nativity scenes, fishing reels, paint rollers and food products.
If you’re puzzled over the ketchup dispensers, you’re not alone. Clearly ketchup must be a vitally important condiment to Trump’s base.
So instead, the 10 per cent tariff on these items will kick in 15 December, giving shoppers in the US time to buy for Christmas – Trump’s whole rationale for the move.
Makes sense. While driving the global economy off a cliff, might as well stop at the roadside viewpoint, crack a cold beer and take in the vista, before continuing on down the road and into the abyss.
Most likely the thought construct was a bit more simplified in Mr President’s head. He probably didn’t like the idea of orange Ebenezer Scrooge memes floating around social media.
Whatever the case, it is a welcome relief for air cargo and indeed the global economy as well, if only a small and temporary reprieve. There is still time before year-end for a resolution to the trade war, although that looks increasingly distant.
The protests in Hong Kong are not helping any either. Particularly now that Trump has essentially linked China’s good behaviour over the protests with a trade deal.
It will be interesting to see August cargo figures ex-China, as a forwarder in Hong Kong told AsiaCargoBuzz.com that there was, in effect, a ‘baby-peak’ forming in August as shippers and forwarders rushed to beat the looming 1 September deadline.
“With the 1 September deadline only voiced by Trump at the beginning of August, there wasn’t much time to ramp up shipments. But we still saw a small but focused push to get consumer tech goods into the US before the deadline,” the forwarder says.
This extension to 15 December will back off some of that pressure and will perhaps enable some form of a peak leading up to the December date-with-destiny, more in line with tradition peak timing.
But it’s not all good news, of course. The Trump administration still plans to impose 10 per cent tariffs on thousands of Chinese food, clothing and other consumer electronics products according to the original 1 September deadline.
These are detailed on List 4A, and includes for instance, smartwatches from Apple and Fitbit, smart speakers from Amazon.com, Google and Apple, and Bluetooth headphones and other devices.
And 1 September will also see the 10 per cent tariff slapped on many diverse products such as live animals, dairy products, skis, golf balls, contact lenses, motorcycle engines, lithium ion batteries, snowblowers and various types of steel. Some clothing items, including coats, mens’ suits and swimwear, remain on the 1 September tariff list.
The fact that Trump has made this move, does however signal at least a minimal recognition by his administration that Americans are going to pay more as a result of this trade misadventure.
The narrative thus far – as glaringly impossible as it is – has largely been centred around the idea that everything about the trade war is good for Americans. Nothing bad… all good. Clearly an untenable position and one that given a lack of resolution in the months to come will surely see US consumers getting increasingly fed up with the rising cost of a great many things.
And with many analysts agreeing that a trade deal between the two countries is unlikely before the 2020 US presidential election, it’s looking to be a cold, cold winter coming after 15 December. Let’s just hope there is some small comfort in the lead-up.