Trump prices on China mean “irreversible” damage to many companies

Apple’s iPhone and other technological equipment, from PC chips, received a stay of China President Trump on Saturday, but for a large part of the American economy and owners of small businesses, damage will soon be irreversible 145% prices be imposed on Chinese imports.

Freight orders canceled and abandoned freight From China, quickly becoming the standard in the trade war between the United States and China, according to leaders of the supply chain, while companies in the American industry put an end to exports of containers, the rates that are hitting as a ton of bricks.

“The producers of furniture in China have noticed a total stop of the orders of American importers, and we hear the same in toys, clothes, shoes and sports facilities,” said Alan Murphy, founder and CEO of Sea-Intelligence.

“We had the same thing across Southeast Asia, but after 90-day stay, these reservations restarted,” said Brian Bourke, commercial director of Seko Logistics, while reservations canceled for containers outside China continue.

“Almost everything is suspended with regard to Chinese affairs,” said Alan Baer, ​​CEO of Ol USA.

“The total tariff of 145% of Trump on Chinese imports would prevent most exchanges between the United States and China,” economist Erica York said on Thursday, vice-president of the federal tax policy of the tax foundation on the Federal Tax Policy of the CNBC.

“There may still be things without any substitute that companies simply have to pay the bill, but for the most part, it cuts it,” said York.

Because it has become clear during the last week that China would remain the main target of the Trump administration’s pricing policy – after 90 -day stay has been granted to all other countries that should be struck by new prices – The message that is passed is that the lower margin goods cannot be produced in a lasting way in China. The new technology exemption can be partially explained by the functioning of the supply chain, but also reinforces where the greatest pain will be felt.

“Higher and more technical goods, such as electronics, machines, medical equipment and pharmaceutical products cannot easily move supply, because the implementation of very technical manufacturing takes time and considerable capital,” said Murphy.

Before exemption from the technological rate, he said that producers of these goods analyzed which components could come elsewhere, while mainly seeking to reduce the short -term American inventories. There is a concerted effort to move production in Southeast Asia, mainly in Vietnam or India. The drop in prices to Europe to maintain production, or outright closure, the production lines were also envisaged.

“Not a risk or a burden that small businesses cannot support”

Stephen Lamar, CEO of the American Apparel & Footwear Association, said that sudden policy changes and high prices disrupt the supply chains at a level that we see from the Pandemic.

“With prohibitive rate levels on American imports from China, many companies have no choice but to cancel orders,” said Lamar. “The constant passage means that the new tariff costs are not presented with precision or predictable until the goods arrive at the port, and the high prices generate invoices which cannot be paid. It is not a risk or a burden that small businesses can maintain.”

Lamar said that without any alternative source on the horizon for many of these companies, in particular small businesses, this sudden lack of orders will immediately result in lost sales and generalized products shortages. “An extension of the trade break to American imports from China is now necessary before the damage is irreversible,” said Lamar.

Murphy warned that on the side of the container lining in the freight sector, the drop in reservations associated with the possibility of Naval construction costs on “Chinese” ships The entry into force next week will result in a “massive restructuring of all lining services in North America”.

“And it will take months to adjust the waste, with peaks of congestion and freight rates for the coming months,” he added.

Murphy said that in all the Chinese producers with whom his business had spoken, none currently seeks to move production in the United States, with a reason being the lack of understanding of the ultimate objectives of the administration.

“The biggest concern here is a complete uncertainty of the end of the Trump administration,” he said. “No one will consider massive investments in American production if the prices are only a ploy to negotiate better commercial transactions. If the administration really pursues an objective of American reindustrialisation, then the long-term tariff plan must be clear, and less discussions on the 4D failures ” and` `art of art,” he said. “The Yo-Yo tactics of the change in daily rate rates only creates uncertainty,” he added.

Freight processing is a way to mitigate the impact of prices. Logistics suppliers can offer linked storage, allowing freight to enter the United States without being billed for a certain time. Use of Foreign trade zones And other transit delay methods allow the temporary postponement of commercial tasks.

“The current circumstances are unprecedented,” said Karsten Kildahl, Commercial Director of AP Moller-Maersk.

Abandoned freight

The fate of the abandoned ocean and air freight – cargo which is not claimed or paid by the maritime company or the transfer of freight responsible for the payment of customs in the name of its client – is not clear and the rules change the port to the port, and contract the contract.

Port managers tell CNBC that they are generally not informed of the abandoned cargo. The agreement of the New York Terminal Conference indicates that the remaining cargo on the terminal of more than 30 days will be considered abandoned and sold for the collection of demonstration charges due to the NYTC – the charges evaluated to leave freight to the terminals for an excessive period. It also indicates that the ultimate costs of costs generally depends on specific shipping contracts. “If the BL (Bill of Ladging) has not been transferred to the recipient, it is the responsibility of the sender. The sender could decide to resume the cargo (that is to say, re-export the cargo), destroy or make a donation.”

The sender generally prepare a “letter of abandonment” for American customs purposes so that the cargo is sold or sold at auction, with the product of the sale / auction paying expenses, such as the use of the container and the chassis, and with the balance of the terminal.

The terminal can move the abandoned cargo in a guaranteed warehouse or leave it on the terminal and sell it from there. There is a market to buy abandoned freight. Companies such as JS Cargo & Freight Dispal, FR8 Auctions or Merchandise USA buy abandoned cargoes, then sell them in stores at reduced prices, points of sale, liquidators, online sellers such as Amazon, drug channels, variety points of sale, buyout centers, liquidators and closing buyers.

Maersk said to CNBC, many sender deploy a “waiting” – the approach and in a recent alert to customers have written that until there is a clearer image, customers will be careful about their level of inventory and continue to explore means to create additional flexibility in their supply chains. In all its global warehouse network, distribution centers, port terminals, ships and freight planes, “additional flexibility” is what many customers are looking for, said Kildahl.

Correction: Alan Murphy, founder and CEO of Sea-Intelligence, warned that on the side of the container lining in the freight sector, a “massive restructuring of all coating services in North America” ​​should be expected. An earlier version of this article has poorly identified the source of the commentary.