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            november 15, 2019

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US tariffs unlikely to mean big changes in supply chains


Threatened US tariffs on the China trade are unlikely to mean big changes in American supply chains, say experts attending the recent Connections 2018 shipping conference in White Sulphur Springs, West Virginia.
"It may have a little impact, but I don't think it will have a big impact," Jon Slangerup, chairman and CEO of American Global Logistics, told delegates, reports IHS Media.
If the US implements tariffs on China, various groups have suggested dire consequences, but supply chain experts did not share these fears.
President Donald Trump plans to impose tariffs on US$50 billion worth of Chinese goods and threatened up to $400 billion more if China retaliates.
The US Treasury Department is expected to also announce restrictions on Chinese investments in the United States, and China plans to respond with tariffs that will likely hurt US producers of cotton, soybean, live animals, and animal products.
Said CH Robinson Worldwide CEO John Wiehoff: "The trends towards globalisation and global optimisation are too compelling. There's too much capital invested that it is not going away. It's going to continue."
Said Johnson & Johnson vice president Sylvia Fouhy: "I don't think there is panic. We're staying the course because we are in it for the long haul."
Mr Slangerup, the former Long Beach port boss, conceded that customers are stocking up before the tariffs are enacted, which can occur as soon as July 6 on $34 billion worth of Chinese goods.
"Some of our customers seem to be accelerating their sourcing to try to get in front of any short-term impacts from tariffs [on earnings]. That may drive an earlier increase in volume than we typically anticipate," he said.
"This is especially true on the e-commerce side where customers are repositioning ahead of a potential disruption. That is how agile supply chains are becoming. [Shippers] anticipate some global impact and they can move quickly to adjust," Mr Slangerup said.
Separately, Gene Seroka, executive director of the Port of Los Angeles, said tariffs "would affect 15 per cent of all cargo through Los Angeles", reported the Wall Street Journal.
"It's not that we're pushing the panic button, but we're watching this very closely because it does have an impact on a number of things, from consumer prices to jobs," Mr Seroka said.
South Carolina State Ports Authority CEO Jim Newsome said it is too early to know what impact tariffs may have.
"I'm having a hard time believing that out of all of this is going to come to a world where we increase tariffs everywhere," he said, adding his was more worried about Europe than China.
His Port of Charleston, is closely tied to the auto industry, handling imported auto parts as well as finished-vehicle exports made at several factories in the US, including BMW and Volvo.
Mr Newsome said he believes tit-for-tat responses are more of a negotiating tactic than settled policy.
"I'm having a hard time believing that out of all of this is going to come to a world where we increase tariffs everywhere," he said.

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