Tariffs Hit Hazmat
Chemical shippers have been hit with $10.8 billion in retaliatory tariffs. But that’s not all, tariffs were set to rise on January first before the recent negotiations began. Billions of dollars of hazmat tariffs were set in place to begin on that date. Among the vast multitude of items carrying those taxes are more than 1,300 chemicals and plastic products. In an industry where there is already a decline in exported chemical/hazardous goods, this past November, this came as a sigh of relief. For a brief 90-day period the US and China will be entering “peace” talks. Maybe these peace talks are the light shining at the end of this “tariff tunnel.” However, this these are not the end of the tariffs the chemical shipping industry is going to be carrying a heavy burden.
Long Term-Short Term
The American Chemistry Council says retaliatory tariffs could cost $1.6 billion in lost US chemicals exports in the short term, rising to $6.1 billion in the long term. The first set of retaliatory tariffs came into play during September. That same month cargo volumes declined a substantial 10%. In the short term, the US could lose $1.6 billion in these costs. In the long term, the US stands to lose $6.1 billion if changes aren’t made.
“The tariffs have had an impact on both imports and exports,” The president of one tank container supplier and broker in Texas said. “The tariffs are a major reason for shaping the market because of the uncertainty being created. A lack of uncertainty in the future always causes decisions to slow down and uneasiness in business.” If the market does not recover from these “peace talks” then it won’t just be the chemical transportation industry that will be in jeopardy.
The numbers behind these taxes and costs are striking. Chemicals and other hazardous materials have only been affected by the tariff wave in August and September. Over 1,500 products imported from China are affected. That totals to a value of about $15.4 billion in 2017 with a larger number in 2018 most likely.
These increased numbers are likely due to the rush of shipments before tariffs were set. However, the growth this year has been lower and slower than the growth last year. 2017 saw an increase of 7% between January and November. On the flip side, 2018 saw an increase of 4.3% within the same months. The tariffs have a large ripple effect on transportation. Chemical transportation is suffering and might continue suffering in the future.