CARM: What all importers need to know about CARM

Universal Logistics - Take The Right Route Logo with 70 Years Badge

Route Article

Remember the U.S./China trade war? It’s back and at risk of escalating

     U.S./China trade

The U.S.-China Phase One trade deal is not dead.  However, the deteriorating relations between the two super powers have put it on life support.  This was very apparent during a recent hard line speech by President Donald Trump who alleged China “ripped off the United States like no one has ever done before”, and “got away with theft” of hundreds of billions of dollars a year; that China “raided our factories, offshored our jobs, gutted our industries, stole our intellectual property”… “unlawfully claimed territory in the Pacific Ocean, threatening freedom of navigation and international trade,” broke its word “on ensuring the autonomy of Hong Kong” and “instigated a global pandemic.”

Trump’s fiery speech made no mention of new tariffs, however, for US importers there is still a strong possibility we could see another round of the tariff wars.  This scenario has resulted in some US importers starting to accelerate orders over fears the U.S.-China relations will worsen as U.S. Election Day comes closer.

Based on US Customs filing data, US maritime import shipments still indicate the nationwide customs filings remain very heavily driven by imports from China.  They also highlight the rollercoaster ride import volumes have taken.  In February, filings plunged due to the shutdown of Chinese exports following the initial Coronavirus (COVID-19) outbreak in Wuhan, and rose through March and during the first three weeks of April as Chinese exporters reopened and caught up with delayed US orders.  They fell again sharply in late April and the first half of May, as a result of the lockdown of US businesses due to COVID-19.  

This caused orders to be cancelled, prompting ocean carriers to institute “blanking” of about 20% of the May and June China-U.S. sailings.  The latter half of May saw volumes start to rebound and carriers began “unblanking” previously cancelled sailings and adding extra sailings.  Finally, during the last week of May, US Customs filings jumped by a third, most likely due to the booming e-commerce demand during the COVID-19 crisis.  This could also be evidence of renewed consumer demand following the reopening of state economies, or of importers concerned about U.S-China relations and front-loading shipments – or both.

In his most forceful statement in a June 18th tweet, President Trump stated the U.S. could pursue a “complete decoupling from China”.  This came a day after Secretary of State Mike Pompeo met with Chinese official Yang Jiechi amid questions over whether the nation’s trade pact will remain intact.  According to Pompeo, Yang said China is committed to maintaining agriculture purchases that were crucial to Trump’s support of the deal.  However, Trump told the Wall Street Journal on June 17th, “I think the trade deal is a great deal.  But ever since we got hit with the Chinese plague, I feel different toward everything having to do with China.”  Meanwhile, analysts have warned these renewed geopolitical tensions present downside risks to US companies exposed to China.

The signing of the Phase One trade deal was a welcome and positive sign that China-U.S. trade relations were on a path to normalization.  It would be extremely disappointing if these escalating tensions jeopardize the agreement and there is a return to the tit for tat tariff wars between them.

For more information, contact Chris Barnard, Vice President – Projects & Market Development.

Quick Tip #37
Recognize that additional costs in today’s market place may not be avoidable

Incorporate an "allowance" for various surcharges when establishing your costing.

Switch to a Logistics
Partner Who Cares

Click the button below to find out why we’ve been Canada’s most trusted freight forwarder and customs broker for over 75 years.

Professional business people team meeting and working in corporate office concept

Register now to learn more about our

101 Logistics Quick Tips

Available exclusively from Universal Logistics