Los Angeles’ port director outlined for the City Council Wednesday potential negative effects of the trade war between the United States and China, with one councilman warning of potential impacts on local jobs and the need to convey that message to Washington, D.C.
“What I see here is more of a war of egos, not a trade war, between these two international leaders, which is clearly going impact our economy,” said Councilman Joe Buscaino, who represents the Harbor area. “We have to remind ourselves during these trade talks, we as a port are truly the gateway to the Pacific Rim, and a loss of trade equates to a loss of jobs.”
Eugene Seroka, the executive director of the port, told the council that for every shipping container the port gains from other countries, it loses two and a half from China.
Seroka said three major industries — agriculture, recyclable and heavy machinery — have been affected by the trade war, industries that ship billions of dollars in goods each year through the port.
President Donald Trump in August announced an additional 10% tariff that would be applied to about $300 billion in Chinese imports. The tariff was later boosted to 15%, and the first round took effect Sunday, affecting more than $110 billion in imports. More products will be hit with the tariffs on Dec. 15.
Trump on Tuesday reiterated claims that China was “ripping off” the United States to the tune of $600 billion a year. The president has justified the tariffs as a way to hit back at “unfair trade practices” by China, and the two nations have been locked in the trade war for more than a year.
Buscaino asked Seroka if he’d been able to speak with White House officials, because if any port were to be affected by the trade war, it would be Los Angeles, he said.
Seroka responded: “During the last administration, I had four cabinet members’ numbers on speed dial. Today, I find it very difficult to make it to even mid-level staff.”
When asked by the council what should be done to try to alleviate the trade war, Seroka said, “We need to start knocking on doors together, amplifying this message so we can get action.”
Seroka said the port is looking to find new customers for shipping needs as well as optimizing its operations through technological advancements in order to remain competitive. He said the port is also trying to better prepare its workers for future demands.
Seroka said 55% of cargo that comes into the port has a tariff or tax on it, and 98% of Chinese goods have tariffs. China was the largest foreign trading partner with the port last year, with $153 billion in cargo value. Its second-largest trade partner was Japan, with $36 billion in cargo value.
“It takes seven Vietnams to make a China,” Seroka said. “What we said (in 2018) still holds true, that there would be consumer impacts. Prices in certain sectors have gone up.”
A recent swell of total imports may have been spurred by fears of tariffs being placed on Chinese goods and could be indicative of slowing business with the country in the near future, Seroka said.
Seroka said any notion that China’s government and businesses are paying for the tariffs is “unequivocally false.” Tariffs are paid by companies to the U.S. government.
“If companies absorb these costs, (they’re) going to have limits on hiring … and they’re not paying attention to job expansion, and secondly they’re not paying attention to capital investment,” Seroka said.
Seroka said trade patterns are starting to shift and companies are looking to work with other southeast Asian nations like Vietnam and the Philippines, paying a little bit more than they would in China.
“Our response is that we continue to grow and, based on my statistics for the first seven months of the year, we’re out-pacing organic growth,” Seroka said. “Imports from China are down 10%, but we’re making it up in these other locations.”
South Korea and Japan could also be the next destinations of major trade, but shipments would need to increase significantly between more than just a few countries to keep the port on par with its numbers, Seroka said.
Seroka said tourism from China is also noticeably down since last year.