Ports raise alarm over consequences of tariff on Chinese cranes

July 9, 2024

Major U.S. ports and industry organizations are pushing back against a proposed 25% tariff on Chinese-made ship-to-shore (STS) cranes set to go into effect later this year. The ports argue that increasing the cost of cranes to lift goods from cargo ships onto land would hamper their ability to expand and maintain global competitiveness.

The American Association of Port Authorities (AAPA) has taken a leading role in opposing the tariff. In a letter to U.S. Trade Representative Katherine Tai, AAPA President and CEO Cary Davis warned that the tariff “will not meet its stated objectives” and instead “will only result in negative outcomes, including grave harm to port efficiency and capacity, strained supply chains, increased consumer prices, and a weaker U.S. economy.”

The AAPA represents over 80 public port authorities nationwide.

The proposed tariff announced in May is part of a broader strategy to counter ascendant Chinese trade dominance and address potential cybersecurity risks associated with Chinese-made port equipment. The measure aims to incentivize the use of domestically produced cranes and reduce reliance on Chinese manufacturers. However, port authorities argue that the policy fails to consider the immediate needs of U.S. ports.

With Chinese-made cranes comprising nearly 80% of those used at U.S. ports and no immediate domestic alternatives available, the industry contends the tariff would effectively penalize ports for purchases they have no choice but to make. With U.S. ports handling approximately 26% of the nation’s GDP and supporting critical jobs, the outcome of this tariff dispute could have significant implications for the broader American economy.

In a press release published at the beginning of July, AAPA said it “will continue to push back against tariffs that will ultimately pass costs on to consumers and businesses.”

There are currently seven ports with outstanding orders of 35 Chinese-made cranes, and with a 25% tariff, the ports will face an additional $131 million in costs, according to the AAPA statement.

The AAPA’s concerns are echoed by individual ports across the nation. Stephen Edwards, CEO and executive director of the Virginia Port Authority estimated the tariff would add $40.38 million to their costs for 12 cranes already under contract.

“This amounts to a punitive cost increase which does not allow for the behavior modification for which the tariff is intended,” Edwards wrote in a letter to Ambassador Tai.

Barbara Melvin, president & CEO of the South Carolina Ports Authority, warned that the Port of Charleston alone would incur approximately $6 million per year from the proposed tariffs.

“As we continue to seek to advance our own competitiveness against our international partners, including Mexico and Canada along the East Coast, this cost will translate to longer wait times and increased dwell times for visiting container ships,” Melvin wrote in a letter to Ambassador Tai.

The port authorities argue that the tariff could have far-reaching consequences beyond their immediate operations. Paul Anderson, President and CEO of Port Tampa Bay, highlighted potential environmental impacts.

“With fewer new STS cranes to move cargo from ship to shore, ships calling on the nation’s ports will stay idling at the dock for longer, thereby emitting more emissions per ton of cargo during loading and unloading,” Anderson wrote.

While the ports oppose the tariff, the Biden administration has taken steps to promote domestic alternatives. In February 2024, the administration announced plans to invest $20 billion in American-made shipping cranes and related cybersecurity measures. Funds from the Infrastructure Investment and Jobs Act and the Inflation Reduction Act will support this initiative.

However, port authorities that it could take years before these domestic alternatives are viable, leaving them in a difficult position. In the meantime, ports contend that the tariff could undermine efforts to make the supply chain more efficient.

Another letter signed by AAPA and a handful of ports in the South and Gulf Coast says the tariff risks “delaying other investments, including projects in which ports partner with the U.S. Army Corps of Engineers or U.S. Department of Transportation,” in addition to “undermining” efforts to increase “supply chain resilience.”

Photo courtesy of South Carolina Ports

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