Northwest Seaport Alliance CEO John Wolfe also told House lawmakers that tens of thousands of jobs in the state could be lost if the United States gets into a full-blown trade war with China.
About $8 billion in annual imports and exports through Northwest Seaport Alliance (NWSA) ports and Seattle-Tacoma (Sea-Tac) International Airport potentially will be affected by U.S. and Chinese tariffs, NWSA CEO John Wolfe said in written testimony for a House Ways and Means Subcommittee hearing on Thursday.
Based on an initial analysis of recent tariff measures activated and proposed by both the United States and China, NWSA projects that about $5.8 billion in imports and $2.2 billion in exports will potentially face “some level of increased tariff,” Wolfe’s testimony said.
NWSA ports, Tacoma and Seattle, handled $75.2 billion in combined export and import value in 2016, according to the alliance’s 2016 annual report, the most recent one available. Sea-Tac handled $18 billion in two-way goods trade value in 2016, outlined in the airport’s January 2018 economic impact report.
China fired two rounds of retaliation last week — an April 4 announcement of its intent to impose 25 percent tariffs on 106 U.S. items worth about $50 billion in 2017 and the April 2 implementation of 25 percent duties on eight different U.S. products, including pork and pork products, and 15 percent duties on 120 other U.S. products, including fruit.
The proposed retaliation of April 4 came in response to the Office of the U.S. Trade Representative (USTR) release a day earlier of a list of approximately 1,300 tariff lines of Chinese goods totaling $50 billion in estimated 2018 trade value teed up for proposed duties of 25 percent. The release of the list followed a USTR determination pursuant to Section 301 of the Trade Act of 1974 that China was forcing unfair technology transfers from the United States.
China’s implemented retaliation of April 2 followed the United States’ March 23 activation of global tariffs of 25 percent on steel and 10 percent on aluminum pursuant to Section 232 of the Trade Expansion Act of 1962.
“Enforcement actions such as tariffs should be a measure of last resort, and when necessary, be carefully and narrowly targeted to address the problem and minimize the unintended impacts on American producers and consumers,” Wolfe said in his written testimony. “We are concerned that the proposed Section 232 and Section 301 tariffs do not yet meet either of these criteria.”
Four of the other six witnesses, including American Chemistry Council CEO Calvin Dooley, expressed opposition to recently announced Trump administration tariffs.
In written testimony, Dooley, a Democrat and a former California congressman, said 40 percent of the products on China’s initial Section 301 retaliation list relate to chemicals, covering polyethylene, PVC, polycarbonates and acrylates, to name a few.
Dooley and Rep. Sandy Levin, D-Mich., engaged in an intense exchange after Levin asked if anyone disagreed with the notion that tariffs were a necessary step toward reaching a multilateral agreement to reduce global excess steel capacity.
“When you have the United States taking the unilateral action of implementation of tariffs, it invites a retaliation targeted at the most competitive sectors of the U.S. economy,” Dooley said.
Levin interjected, “I understand that. You need to … tell us how we’re going to reach a global solution on a glut of Chinese steel that has costed American jobs. You need to answer that.”
“We do,” Dooley said.
“You don’t,” Levin said.
“It takes leadership to engage with our allies,” Dooley said.
“We’ve been engaging them for years, Mr. Dooley,” Levin responded.
Before the exchange, Levin said the Trump administration has been conscious of the wage implications of the post-World War II globally linked trading system, which he said “became, too often, rigid and insensitive.” He said the tariffs can be used as a tool to address unfair trade in steel and aluminum as well as unfair Chinese trading practices.
Alliance for American Manufacturing President Scott Paul said during the hearing that China maintains “significant tariffs on virtually every American product that is coming into its country.”
Rep. Jason Smith, R-Mo., blasted historical and current trade barriers in China, saying the country has more than 19,000 tariffs on imported goods.
“We need to remember that, as U.S. citizens, the Chinese aren’t looking out for the American citizen; the Chinese aren’t looking out for the American worker; the Chinese aren’t looking out for the American farmer,” Smith said. “That’s why they have all kinds of tariffs on value-added soybean products.”
Smith’s southeast Missouri district is in a unique position in the U.S.-China tit-for-tat. It houses an aluminum smelter and is a hotbed for soybean growth, he noted.
China included yellow and black soybeans in its list of proposed Section 301 retaliation, causing many agriculture stakeholders to express concerns.
Smith said the United States needs to secure better opportunities for its aluminum producers and soybean growers, among others, in a way that doesn’t yield China an unfair trade advantage in the long run.
He also said aluminum prices have dropped 4 percent since March 1, despite 10 percent tariffs. “That’s opposite of what everyone said prior to the president proposing that,” Smith said.
Wolfe attributed the recent losses of NWSA port trade to Canadian ports to tariffs and the uncertainty caused by them. He said tens of thousands of jobs in Washington state could be lost if the United States gets into a full-blown trade war with China, and those jobs could be hard to get back.
Though not a tariff issue, Wolfe pointed to the 2014-15 labor dispute that disrupted West Coast port operations as an example of something that impacted trade-related commerce.
“There was a shift in the trade lanes as a result of that, and some of that market share you can never get back,” Wolfe said. “There’s certainly risk there.”
Wolfe also noted that imports support exports and export-related jobs to a significant degree.
The written and in-person testimony of Kevin Kennedy, president of Splendora, Texas-based steel fabricator Kennedy Fabricating, described how his importing and exporting company has been affected by the administration’s tariffs.
Steel tariffs have led to decreased competition for U.S. primary steel producers, one factor that has resulted in a recent 40 percent price increase in domestic steel, Kennedy wrote in written testimony.
He highlighted as an exploitable gap the fact that foreign fabricated steel isn’t covered by the steel tariffs.
“This means that a company in China can now purchase a raw steel beam from a Chinese mill at a 40 percent discount, drill two holes in it and ship it to the U.S. as a fabricated good without a tariff,” Kennedy wrote. “This is a major loophole, and it needs to be addressed.”
Tariffs could have $8b impact on Washington ports
