New proposal would bring high levies on Chinese-made ships coming to U.S. ports; manufacturers and services providers would “be harmed, and frequently significantly so”
Washington, D.C.—Five unions recently filed a petition with the Office of the U.S. Trade Representative (USTR) charging that certain acts, policies and practices of China prevent the U.S. commercial shipbuilding industry from competing internationally.
The petition doesn’t come without potential unintended consequences and negative ramifications for the automotive aftermarket’s manufacturers, service providers and their customers, according to a new study.
The Office of the U.S. Trade Representative (USTR) issued a set of remedy recommendations after the unions’ petition to re-boot U.S. ship building that included port fees and export restrictions, some more extensive than that sought by petitioners, to penalize ocean carriers that use Chinese-built ships and to support the U.S. shipbuilding sector.
“The proposed ship fees would cause economic harm by disrupting critical logistics networks, undermine the competitiveness of U.S. businesses and increase prices for American consumers,” said Bill Hanvey, president and CEO, Auto Care Association, which voiced concerns to the USTR in comments.
In a letter signed by the Auto Care Association and more than 300 organizations, industry leaders collectively opposed the USTR’s ship remedy proposal, calling on the USTR to “reconsider the proposed remedies which will significantly impact the millions of stakeholders who rely on efficient maritime services to move goods in and out of the United States.”
The Auto Care Association, along with a group of more than 30 organizations representing a wide range of industry sectors, commissioned a study conducted by Trade Partnership Worldwide, LLC, to examine the net economic impact of the USTR’s shipbuilding remedies.
“While the U.S. shipbuilding industry (manufacturers and workers) would benefit from the remedy proposals,” states the study, “many other sectors of the economy (farmers, manufacturers and services providers, including their workers) would be harmed, and frequently significantly so.”
Key findings from the study include:
- The proposed remedies would negatively impact the U.S. economy, reducing output and likely worsening the trade deficit.
- Energy exports and goods from various manufacturing industries would decline due to higher shipping costs and reduced trade.
- U.S. ports and related sectors would face negative impacts on output and employment.
- The negative effects would ripple through supply chains, affecting manufacturers, importers, retailers and other stakeholders such as wholesale and retail trade, hospitality and consumer services industries.
The report concludes “a comprehensive assessment of the various remedies suggested by the USTR finds that in every case they would result in net losses for the U.S. economy, U.S. trade, and most of the U.S. shipbuilding supply chain. The proposed remedies, individually and in aggregate, would reduce U.S. gross domestic product (GDP) and likely worsen the overall U.S. trade deficit.”
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