US Ports Oppose Tariff on China Cranes

[ABS News Service/08.07.2024]

A proposed 25 percent tariff on Chinese-made port cranes has been met with strong opposition from US port authorities and terminal operators, who warn of unintended negative consequences such as reduced port efficiency, higher consumer prices, and a weakened national economy. The tariff is set to take effect on August 1.

Over the past week, ports and marine terminals have urged the US Trade Representative to withdraw or delay the tariff.

Cary Davis, president and CEO of the American Association of Port Authorities, emphasized in a letter to the USTR that the tariff would not achieve its objectives but instead harm port efficiency, increase consumer prices, and weaken the economy.

Ship-to-shore cranes are crucial for loading and unloading containers at ports. The AAPA estimates that ports with existing contracts with Chinese crane manufacturers now face at least $131.25 million in unexpected costs due to the new tariff. The association noted that at least 35 STS cranes are currently on order across the country, with an average cost of $15 million each, and 61 more cranes are expected to be ordered in the next five years.

Increased Costs

For instance, the Port of New Orleans anticipates a $52 million cost increase for its planned Louisiana International Terminal expansion due to the tariff, and the Port of Virginia faces an additional $40.38 million in costs for its 12 cranes already under contract. The AAPA warned that ports with existing contracts would have to absorb millions in new costs, potentially reducing the scope of other projects, taking on debt or delaying necessary infrastructure upgrades.

Public comments submitted to USTR from various port authorities, terminal operators, and industry stakeholders echoed the AAPA's concerns, arguing that the tariff would not achieve its intended goal. STS cranes are among a range of Chinese products facing a 25 percent tariff increase, including steel and aluminum, solar cells, and electric vehicles, aimed at rebuilding US industrial capacity.

A joint letter signed by 15 ports or organizations pointed out that there are no US manufacturers of STS cranes, nor have there been for nearly four decades. It is unlikely that any manufacturers could produce reliable and durable American-made STS cranes within the next several years.

Additionally, Germany and Finland, the only other countries producing a small fraction of STS cranes, source most components from China, making their products subject to the tariff as well.

Project Cut Backs Likely

Ports warned that increased costs would force them to cut back on other projects, take on debt, or delay essential infrastructure upgrades, leading to reduced efficiency, longer wait times for ships and ultimately higher prices for consumers.

Opponents argued that the tariff's unintended consequences could ripple through the US economy, causing supply chain problems for US manufacturers, retailers and farmers. They also warned that the tariff could make US ports less competitive compared to those in Mexico and Canada, further disrupting supply chains and potentially driving business away from US shores.

Critics stated that the tariff contradicts the government's commitment to modernizing and improving US infrastructure through the Bipartisan Infrastructure Law. They added that the tariff could hinder ports' ability to meet growing cargo demand and drive up global prices for cranes, negatively impacting all US ports.

Complicating the matter is the ongoing concern about vulnerability of port infrastructure to Chinese intelligence collection and cyber attack. In January, President Biden signed an Executive Order to bolster the Department of Homeland Securityís authority to address maritime cyber threats, including through cybersecurity standards to secure American ports' networks and systems.

The Administration pledged to invest over $20 billion into US port infrastructure over the next five years through the Presidentís Investing in America Agenda, including the Bipartisan Infrastructure