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US trade war expected to hurt China when 25pc tariff kicks in next year

2018-11-5

SINCE the July implementation of US tariffs on US$34 billion in Chinese goods, imports on those goods dropped 21 per cent year on year, according to the Seabury Global Ocean Trade Database.

During the preceding weeks there had been a huge push to import products ahead of the tariffs. The China-US container trade from April through June grew 10 per cent year on year based on Accenture's analysis of the US Department of Commerce's import and export data, reported CNBC News.


The Seabury data also showed that US imports of Chinese steel and aluminium plunged 53 per cent after tariffs on those products went into effect in March compared to the same month the previous year.


Data are still pending on imports of the $16 billion in Chinese goods subject to tariffs as of August and another $200 billion of goods as of September.


The effect of the first round of tariffs can be seen by looking inside the Chinese containers being exported to the US. According to Ocean Trade Database, for example, the number of transformers imported in July was down 60 per cent compared to the same month in 2017.


Experts say the goods on the tariff list are going elsewhere.


"You have already seen a shift in moving Chinese cargo away from the US to other countries," said Seabury consulting director Michel Looten. "Those goods went on to Japan, South Korea, Taiwan, Germany and Italy."


Experts say the effects of the $200 billion tariffs that went live in September will help forecasters on their 2019 outlooks. "We will have some insight into the impact in a couple of weeks when that trade data is released," Mr Looten told CNBC. "But that's the tip of the iceberg. The real effect hits in 2019 when the 25 per cent tariff is enforced."


In September the DHL Global Trade Barometer lowered its Chinese trade outlook by four points to 59, saying the country is growing but at a slower pace. This barometer's readings above 50 indicate growth. The forecast is based on Accenture's analysis of freight and shipping trade flow data.


China's latest report on economic growth fell short of expectations, but for those who monitor traffic on the global water highways, the news was not a surprise. In fact, freight and shipping data over the last several months have been pointing to such a slowdown.


A previous economic slowdown in China started showing up in the shipping data six months before other people noticed, said Seaspan's former CEO Gerry Wang.

 
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