This week:
- US Trade Representative considers public comment on Biden’s China tariffs, will decide soon
- Panama Canal transits set to reach near-normal levels in September after heavy rainfalls
- Air cargo peak season keeps soaring, shows no signs of returning to Earth anytime soon
- US shippers have little to no options if ILA strikes hit at the end of September
USTR to Announce Decision on Biden’s China Tariffs Later This Month
The US Trade Representative (USTR) will announce its final decision on the Biden administration’s proposed tariff increases on Chinese goods later this month. The proposed tariffs, first announced in May, target sectors like electric vehicles, solar cells, and semiconductors in an effort to bolster America’s competitiveness in these markets.
The USTR opened a public comment period on the proposed changes shortly after the Biden tariffs were announced. Since then, the USTR has received over 1,100 responses, many from manufacturing and retail groups.
The comments express concern over potential price hikes and retaliation from China. However, some organizations, like US Steel, called for even higher tariffs. The Alliance for American Manufacturing supports the tariff hikes, although the group expressed concern about the potential long-term impact of proposed exclusions.
Several port authorities raised concerns about the potential impact on their operations due to hefty proposed tariff increases on Chinese ship-to-shore cranes. Many of those port authorities previously said there is no cost-effective alternative to the Chinese cranes.
After concluding its comment review, the USTR will issue a final determination. Any approved tariff increases will take effect two weeks later.
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Panama Canal Transits to Increase in September, Nearing Normal Levels
The Panama Canal Authority (ACP) plans to increase daily vessel transits to 36 in September and hopes to resume normal levels soon, following reductions due to heavy rainfall in June and July.
This comes as the ACP is in discussion with local communities affected by a $1.6 billion project to expand the canal’s water catchment. The project includes the construction of the Rio Indio reservoir and may also include smaller reservoirs to ensure water supply for both the canal and local residents.
The expansion is intended to stabilize water supplies following years of unpredictable rainfall and changing climate conditions. Panama suffered its second-driest year on record last year, which forced the canal to make drastic cuts to daily transits.
The additional water from the Rio Indio reservoir is expected to increase canal transits by 11 per day. Project completion is slated for 2030, with construction of the reservoir and its associated infrastructure expected to begin in 2026. An ACP spokesperson said the US Army Corps of Engineers is providing ongoing technical assistance to the project, including engineering services and project analysis.
Extended Air Cargo Peak Season Shows No Signs of Slowing Down
Air cargo rates from Asia remain elevated, as an already long peak season shows no signs of slowing down. The strong showing is due to a number of factors, including disrupted ocean shipping, ongoing growth in the eCommerce sector, and increased demand for time- and temperature-sensitive products.
The recent CrowdStrike outage, which disrupted Microsoft systems worldwide, temporarily slowed down air shipments out of Asia but didn’t significantly impact the market. According to the Journal of Commerce, rates from Shanghai to North America and Europe remain high, with year-over-year increases of 25% and 44%, respectively.
The extended air cargo peak season is expected to continue through August and into September. Year-over-year percentages are also likely to be high, partially due to the low bar set in 2023. Trade routes from the Middle East and Central Asia to Europe have seen the highest growth in spot rates because of ocean diversions and anti-government protests in Bangladesh. In the United Araba Emirates, congestion at Jebel Ali port has also led to an uptick in air freight demand.
Editorial: US Shippers Have Few Options if Strikes Become a Reality
In an editorial published August 1, Journal of Commerce (JoC) Executive Editor Mark Szakonyi said US East and Gulf Coast ports will have few options, and “none of them great,” if threatened labor strikes become a reality after September 30. That’s when the existing contract between International Longshoremen’s Association (ILA) workers and the US Maritime Alliance expires. Contract negotiations remain at a stalemate.
Szakonyi points out that it’s too late for importers to join this year’s trend of frontloading cargo shipments, as mid-August is the latest date Asia shipments can be loaded and arrive before. If expedited rerouting to US West Coast ports is possible—and it’s not clear that it is—Asia outbound capacity has been tight the last few weeks. Szakony also points out that Canadian rerouting comes with its own set of challenges, including labor issues currently brewing north of the border.
The heads of two major East Coast ports told the JoC that a work stoppage of one or two days can be managed, but anything beyond that may have devastating consequences. Port leaders said a work stoppage lasting five or six days could require a month’s recovery period.
