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Port of L.A. estimates 15% of cargo could be subject to U.S., Chinese tariffs

WILMINGTON, CA -- NOVEMBER 1, 2017 -- Trucks pull out at the Port of Los Angeles on November 2, 201
Cranes at the Port of Los Angeles last year.
(Genaro Molina / Los Angeles Times)

The Trump administration’s tariffs on Chinese goods, as well as China’s retaliatory duties, could hit 15% of the shipments that flow through the Port of Los Angeles, a top local official said.

Port of L.A. Executive Director Gene Seroka said the port conducted a preliminary analysis of the possible effects of a looming trade war with China, taking into account tariffs announced by both the United States and China.

Because tariffs are a tax on goods, they have the potential to raise prices on consumer products and harm the local logistics industry, a major employer in Southern California.

The ports of Los Angeles and Long Beach estimate they support nearly a million jobs throughout Southern California. About 50% of the goods that flow through San Pedro Bay come from or head to China.

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Seroka noted the severity of the impact will depend on how companies respond to the higher costs. They could absorb the costs, pass them on to customers or find sources other than China. If they chose other sources, those goods might be shipped in somewhere other than Los Angeles.

“If goods are not moving the same way, yes, there will be an impact on jobs,” he said.

For now, the port is preparing for a potential surge of cargo on the assumption that companies will try to rush shipments to beat tariffs.

A 25% tariff on $34 billion in Chinese goods is set to take effect July 6, along with Chinese retaliatory measures of the same value on U.S. goods.

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The U.S. trade representative plans to impose 25% tariffs on an additional $16 billion worth of Chinese goods, and 10% tariffs on $200 billion more. The specific goods and the timing of those tariffs are yet to be determined.

Additionally, President Trump has vowed to impose tariffs on another $200 billion if China retaliates again — as it has promised to do.

Add it all up and the potential U.S. tariffs on $450 billion of goods would hit about 90% of all Chinese imports to the country.

Seroka said the port’s 15% estimate of goods affected does not include Trump’s second $200-billion threat. The port estimated the effect of those tariffs by looking at the value of Chinese imports it handles. But it is operating with limited information. The Trump administration has yet to release lists of what products would be hit by the first $200-billion round of tariffs, for instance.

In announcing the first $34 billion in tariffs, the U.S. trade representative said the duties were needed to protect U.S. leadership in technology and combat China’s alleged intellectual property theft, something various administrations have long complained about.

Trump has also blamed trade imbalances for hollowing out America’s factories. Many economists disagree and point instead to automation as the main culprit.

Seroka said the port supports a “rules-based trade and investment system that allows for American companies to flourish.” He noted that many workers rely on international trade for a paycheck and that many manufacturers rely on international parts to run their factories.

andrew.khouri@latimes.com

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Follow me @khouriandrew on Twitter


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