“Rush Game With The Tariff”: The Race Is On To Get Chinese Goods Into U.S.

As the US-imposed 10 percent tariffs on $200 billion worth Chinese goods is set to take effect Monday, the race is now on to get Chinese goods into the U.S.

By plane, train, and sea, a frenzy has begun, resulting in surging cargo traffic at US ports, booming air freight to the US, and urgent dispatch of goods from Chinese companies earlier than planned. Getting in under the wire before Trump’s tariffs bite could mean hundreds of thousands saved on single shipments. 

Bloomberg describes this week that cargo rates for Pacific transport are at a four-year high as manufacturers rush to get everything from toys to car parts to bikes into American stores.

This rush, which comes on top of a typically already busy pre-holiday season, is expected to continue well after next week as the tariff will leap from 10 to 25 percent after the new year

US importers are expected to stockpile Chinese products before the 2019 25% mark. There’s currently widespread reports of companies scrambling to pay expedited air freight fees to dodge the new tariffs, as well as move up their orders. 

Bloomberg relates the following on both sides of the Pacific

  • In Jiangsu province on China’s east coast, E.D. Opto Electrical Lighting Co. dispatched a batch of car lights by sea to Los Angeles in late August, earlier than planned.
  • In the industrial hub of Dongguan in southern China, toy maker Lung Cheong Group: “More clients in the last two months are asking if we can deliver goods ahead of the scheduled time to avoid the upcoming tariffs,” said Chairman Lun Leung. For small high-tech toys that have higher retail selling prices, some clients are willing to upgrade from sea freight to air, he said.
  • Imports to northern California’s Port of Oakland surged 9.2 percent in August. That was the busiest August in the port’s 91-year history.
  • At the Port of Long Beach, imports of containers rose 9.4 percent this year through August. That comes after a record 2017.
  • Concerns about the trade dispute is also spurring last-minute shipments across the Pacific for Ocean Network Express Pte., a combination of the container operations of Japan’s three biggest shipping firms, it said.
  • Ralph Bradley, chief executive officer of a small automotive lighting manufacturer in Fort Worth, Texas, has more than $300,000 of products coming to the U.S. on a boat from China. There’s not much he can do about paying the 10 percent duty, or $30,000, on those vehicle-lighting parts.

Describing the tariff-induced rush, Rahul Kapoor, an analyst at Bloomberg Intelligence in Singapore, said “We have a rush game with the tariff,” and noted instances of cargo actually left behind at Chinese docks because ships were packed so full ahead embarking for the US. 

If there’s one bright spot for Americans, it’s that initially the trade war  which has this week seen China with its own tariffs on $60 billion worth of US goods  is not expected to hit consumer check books right away. 

With accelerated shipments from China in the short term in order to beat the tariff deadlines, the anticipated price hikes at retailer giants like Walmart and Target will likely be delayed due to the surplus of items coming in. 

Meanwhile China, for its part has had its trade surplus with the US pushed to record levels in August due to the front-loading of exports.