Trade tensions between the world’s two largest economies hit close to home in the first quarter of 2019 as imports from China to the San Pedro Bay ports declined in several top categories.
Popular consumer goods from furniture to electronics and apparel dropped from the same period a year earlier after surging toward the end of 2018, according to Panjiva, the supply-chain research unit at S&P Global Market Intelligence Inc.
The weeks around the Lunar New Year holiday — which this year fell in early February — tend to see declines in import volumes. But 2019’s drop-off was more widespread, economists said, after U.S. businesses pulled many of their orders in early to get ahead of impending trade restrictions.
Paul Bingham, director of transportation consulting at IHS Markit Ltd., said the San Pedro Bay numbers reflect a natural drop-off in imports after retailers and distributors stocked up in anticipation of wider tariffs. And while the tariffs are on hold for now as negotiations between the United States and China continue, Bingham said the trade slowdown could reach past the summer months as China’s economy is slowing.
“It’s likely to continue for the second and maybe even into the third quarter,” he said. “If there’s more threats, back and forth, you could see a sharper downturn in trade.”
At the frontlines of the battle are the Los Angeles and Long Beach ports — the nation’s largest hub for trade with Asia.
Data from S&P shows that the imported volume of Chinese electronics through the San Pedro Bay ports fell 5% during the first quarter from the same period a year earlier. Chinese machinery imports dropped 11%, Chinese autos and auto parts declined nearly 18%, and furniture from China fell 16%.
Nationwide, Panjiva found the volume of all imported goods from China declined 6% in the first quarter.
President Donald Trump and his Chinese counterpart Xi Jinping have been matching each other in escalating tariffs for nine months. Trade talks are ongoing, but if they fail, Trump has threatened to go even further by imposing additional tariffs on $267 billion worth of Chinese goods — encompassing nearly everything the United States imports from its largest trading partner.
The trade battle has already roiled supply chains and cost the economy billions of dollars. Transnational companies have reportedly been shifting their China operations to other low-cost countries. And there’s growing concern that the tensions could slow the global economy.
Last month, a study from the Federal Reserve Bank of New York, Princeton University and Columbia University found Trump’s tariffs, imposed on $250 billion dollars worth of Chinese goods, were costing importers and U.S. consumers about $3 billion a month in added tax costs.
And in a report released earlier this month, the International Monetary Fund projected a slowdown in growth for 70% of the world economy in 2019 in part due to U.S.-China trade tensions.
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