Tariffs stirring fear at many US points of entry for imports

Updated 01 September 2018

Tariffs stirring fear at many US points of entry for imports

NEW YORK: To understand why the impact of President Donald Trump's tariffs could be felt throughout the United States, consider this: From the West Coast to the Great Lakes and the Gulf of Mexico, at least 10 percent of imports at many ports could be hit by new tariffs if Trump's proposals take full effect, according to an exclusive analysis of government data by The Associated Press.
Ports and ground terminals in nearly every state handle goods that are now or will likely soon be covered by import tariffs. And port officials fear this could mean a slowdown in shipping that would have ripple effects on truckers and others whose jobs depend on trade.
Since March, the U.S. has applied new tariffs of up to 25 percent on nearly $85 billion worth of steel and aluminum and various Chinese products, mostly goods used in manufacturing.
"Tariffs are working big time," Trump tweeted recently.
The president has argued that the tariffs will help protect American workers and force U.S. trading partners to change rules that the president insists are unfair to the United States.
At the same time, his administration is preparing to slap tariffs of up to 25 percent on an additional $200 billion in Chinese imports — many of them parts and materials U.S. companies depend on, along with consumer goods — after a public comment period ends Thursday.
These tariffs are the administration's response to its charges that Beijing uses predatory tactics to try to supplant U.S. technological supremacy. Those tactics include cyber-theft and a requirement that American companies hand over trade secrets in exchange for access to China's market.
In New Orleans, port officials say a tariff-related drop in shipments is real, not merely a forecast. Steel imports there have declined more than 25 percent from a year ago, according to the port's chief commercial officer, Robert Landry.
The port is scouting for other commodities it can import. But expectations appear to be low.
"In our business, steel is the ideal commodity," Landry said. "It's big, it's heavy, we charge by the ton so it pays well. You never find anything that pays as well as steel does."
The port of Milwaukee imports steel from Europe and ships out agricultural products from the Midwest. Steel imports haven't dropped yet because they are under long-term contracts, said the port director, Adam Schlicht. But there has been "an almost immediate halt" in outbound shipments of corn because of retaliatory duties imposed by the European Union on American products.
Much of the corn, he said, "is just staying in silos. They are filled to the brim."
Many other ports have been humming along and even enjoyed an unexpected bump in imports during June and July as U.S. businesses moved up orders to ship before the new tariffs took effect. That started with manufacturing goods and is now spreading to retail items for back-to-school and Christmas.
"Some of my retail customers are forward-shipping the best they can to offset proposed tariffs," says Peter Schneider, executive vice president of T.G.S. Transportation, a trucking company in Fresno, California.
Port officials were encouraged by this week's announcement that the United States and Mexico had reached a preliminary agreement to replace the North American Free Trade Agreement, hoping it might lead to reduced trade barriers. Canada's participation in any new deal to replace NAFTA, though, remains a major question mark.
The port officials continue to worry, though, that Trump will make good on a plan to expand tariffs to an additional $200 billion in Chinese imports — a list that includes fish and other foods, furniture, carpets, tires, rain jackets and hundreds of additional items. Tariffs would make those items costlier in the United States. And if Americans buy fewer of those goods, it would likely lead to fewer container ships steaming into U.S. ports.
The impact will be felt keenly at West Coast ports like Los Angeles and Long Beach.
Los Angeles Mayor Eric Garcetti, relying on information from his port officials, said his port — the biggest in the United States — could suffer a 20 percent drop in volume if the additional $200 billion in tariffs are imposed against Chinese goods.
Jock O'Connell, an economist in California who studies trade, said he doubts a downturn would be so severe — that would match the slump that accompanied the global recession of 2008 — "but we will see a definite impact."
Eugene Seroka, executive director of the Los Angeles port, worries that "if tariffs make it too expensive to import, there will be an impact on jobs."
Seroka and others don't expect layoffs on the docks. Union longshoremen — whose average pay last year on the West Coast was $163,000, according to the Pacific Maritime Association, which negotiates for the ports — often have contract provisions ensuring that they are paid even if there's no work. And there are fewer of them than there were a few decades ago because the advent of shipping containers has reduced the need for people on the docks.
Dwayne Boudreaux, an International Longshoremen's Association official in Louisiana, said, though, that his stevedores are handling about 10 percent less steel from Japan because of the new tariffs.
"We don't think it's going to (get) worse," he said. But, he added, "who knows — that could change from the next press conference."
The impact might be greater on truck drivers and warehouse workers. Fewer will be needed, according to O'Connell.
Many drivers who deliver shipping containers from the dock to warehouses are independents contracted by trucking companies, and they don't get paid if there is nothing to haul. Some might leave the profession, said Weston LaBar, CEO of the Harbor Trucking Association in Long Beach, California.
"It's hard to retain drivers," he said. "If we don't have work for those drivers, we're worried they will leave for some other segment of the trucking business or go into another business, like construction."
Less shipping means less revenue for the ports — something that could limit their ability to pay for expansion and improvement projects, according to Kurt Nagle, president of the American Association of Port Authorities. He said U.S. ports are in the midst of a planned $155 billion in infrastructure spending from 2016 through 2020.
The current trade war was foreshadowed in January by steep U.S. tariffs on imported solar panels and washing machines. It exploded with the U.S. tariffs of 25 percent on imported steel and 10 percent on aluminum. Then came two rounds of duties targeting about $50 billion in imports from China.
Along the way, China, the European Union, Turkey, Canada and Mexico imposed retaliatory duties on U.S. goods including farm products and Harley-Davidson motorcycles.
On top of the $200 billion in additional Chinese imports that could face U.S. tariffs starting next week, Trump has said that if Beijing continues to retaliate, he may eventually slap tariffs on, all told, $450 billion in Chinese goods. That would be equal to nearly 90 percent of China's 2017 exports to the U.S.
Trade wars are usually temporary. President George W. Bush abandoned his steel tariffs after less than two years.
Milwaukee's port director worries, however, that damage from the current trade dispute could linger. Canada is increasing corn exports to Europe, and Brazil is trying to pick up the slack in soybean exports to China.
"Others are already picking up that business," Schlicht said.


Saudi Arabia issued 117 permits for entertainment activities in 2020

Updated 13 April 2021

Saudi Arabia issued 117 permits for entertainment activities in 2020

  • Tarfeeh enables investors and companies operating in the sector to request licenses and permits for recreational activities and events

RIYADH: The National Committee for Digital Transformation announced on Monday it has officially chosen the online portal “Tarfeeh” to organize and develop the Kingdom’s entertainment sector.

Tarfeeh was chosen from more than 800 potential platforms under consideration, according  to a report by the Saudi News Agency.

Established by the General Entertainment Authority (GEA), Tarfeeh enables investors and companies operating in the sector to request licenses and permits for recreational activities and events, and to apply for accreditation certificates for specialized activities in the entertainment sector.

Using the portal, the GEA in 2020 issued 117 permits for entertainment activities, 219 licenses for operating entertainment facilities, and 398 permits for live shows in restaurants and cafes, despite the restrictions related to the coronavirus pandemic.

The portal also enabled 188 investors to obtain a license to manage and develop artistic and entertainment talents.

The number of restaurants and cafes registered in the portal in order to obtain permits for live performances was more than 410.


Oil ‘supercycle’ not on the cards: Energy experts

Updated 12 April 2021

Oil ‘supercycle’ not on the cards: Energy experts

  • Key triggers needed to push crude over $100 per barrel still missing: Report

DUBAI: Oil is unlikely to hit $100 per barrel on a sustainable basis in the near future, according to experts at the Oxford Institute for Energy Studies (OIES), a prestigious UK-based think tank.

In a report prepared by Bassam Fattouh and Andreas Economou of the OIES, the likelihood of an imminent oil “supercycle” — suggested by some commodities analysts — is downplayed because of the absence of key factors that might spark a surge in the price of crude.

“Some key triggers of an oil supercycle, such as an inelastic supply in the face of rampant demand and lack of spare capacity and refining constraints, which could push prices to $100 a barrel and keep them at those high levels, are still missing,” they argue.

Rather, oil will trade in a range of $59-$69 per barrel until the end of 2022, the authors said. “Sentiment could push prices beyond these boundaries, but they are not likely to be sustainable. For prices to reach anywhere close to $100/b, we need to consider other shocks,” they added.

The idea of a “supercycle” in oil and other commodities has gained traction in recent months, as the price of crude has recovered from the historic lows of last year’s pandemic collapse and some oil companies slashed investment in new fields.

Analysts at JP Morgan and Goldman Sachs — two of the biggest banks in the world — have suggested that the global market is on the brink of a run that could see oil top $100 per barrel.

But the Oxford experts, in their latest Oil Monthly report, conclude that this is unlikely. “While oil market dynamics and prices have markedly improved, the degree of uncertainty surrounding the outlook remains high. Following a challenging year, OPEC+ policy choices will keep dictating market outcomes, but the recent oil price rebound does not yet signal the start of the next oil supercycle,” they said.

The experts added that while April 2020 was “the bleakest month in the history of oil markets” with prices averaging $23 per barrel, the price has rebounded to above $60 as demand recovered, stocks were drawn down and OPEC+, the producers’ alliance led by Saudi Arabia and Russia, has kept a tight lid on supplies.

“This impressive recovery occurred despite wide uncertainty surrounding oil demand and the fact that it has yet to fully recover to its pre-pandemic level. Although the dominant expectation is for oil demand to rebound strongly in the second half of 2021 as countries lift restrictions and the global economic recovery accelerates, the uncertainty over the timing and pace of the rebound remains high,” the authors added.

The Oxford analysis provides support for the continued caution expressed by Saudi Energy Minister Prince Abdul Aziz bin Salman, who recently said he would not believe evidence of a recovery in demand “until I see it.”

OPEC+ policy is singled out as one of the main factors behind the recovery in crude prices, the Oxford experts said, noting a “more flexible and more effective OPEC+ in dealing with the adverse shock of COVID-19 and in influencing market expectations and shaping sentiment.”

They added: “Although it has become increasingly difficult to predict OPEC+’s next move, this unpredictability is part of a deliberate policy and has had the effect of increasing the market impact of OPEC+ decisions. At a more fundamental level, it shows a more assertive role for OPEC+ in dictating the pace of market rebalancing.”

Some analysts have forecast that higher oil prices will lead to a return of US shale supply, which was hammered by the pandemic lockdowns in America. But the Oxford analysis does not see this on the immediate horizon. “There is an emerging consensus that US shale growth will be rather limited or even decline in 2021,” the authors said.

The risk of Iranian oil flooding the market in the event of a deal between Tehran and Washington on nuclear policy is also overstated, the authors added. “Even if the Iran nuclear deal is revived, the export increase from current levels will be moderate,” they said.


Saudi food industry market leader 'performed exceptionally' despite pandemic

Updated 12 April 2021

Saudi food industry market leader 'performed exceptionally' despite pandemic

  • Almunajem Foods has expanded its agreement with Brazil-based JBS, the world’s leading chicken and beef producer

RIYADH: Almunajem Foods, one of Saudi Arabia’s largest private food companies, has reported a successful 2020 and is maintaining a positive outlook for 2021, despite the coronavirus pandemic continuing to affect the economy on a global scale.

The company, which has more than 70 years of experience in the Saudi food market, serves more than 22,000 customer outlets including retail, food services and wholesale channels. Their expertise lies in importation, marketing and the distribution of frozen, chilled and dry foodstuffs.

Almunajem operates 14 branches, 12 of which are equipped with temperature-controlled warehouses. They also work with more than 60 suppliers, and brands under the company’s umbrella include household names such as Coopoliva olives, President dairy products and their own in-house brand, Dari.

Thamer Abanumay, CEO of Almunajem Foods, told Arab News that business was flourishing despite the setbacks posed by the pandemic in 2020 and said the company had managed to minimize interruption of services.

“Our business was put to the test in 2020, but I can confidently say that on all fronts we performed exceptionally. Our operations maintained a high level of resilience despite the obstacles caused by COVID-19. Thanks to our strong logistical abilities, backed by technology, data and tools, we were able to move our products safely and in a timely manner,” he said.

Abanumay predicts significant growth in the food market as a whole over the next few years, and sees many potential opportunities to capitalize on. “The participation of women in the labor force, as well as the rapid growth of the inbound tourism industry in the Kingdom, will have a significant impact on the food consumption and food service industries. We will also focus on increasing our backward integration and produce more products in Saudi Arabia,” he said.

The company has also managed to forge new business deals with international partners, despite the uncertainty plaguing international trade.

The company on Sunday announced an expansion to its longstanding collaboration agreement with Seara, a subsidiary of Brazil-based JBS, the world’s leading chicken and beef producer. The agreement forms part of Almunajem Foods’ diversification strategy to service its business-to-business customer base across the Kingdom and to meet the increase in demand from the food industry.

The agreement includes Almunajem Foods distributing a wide variety of poultry products, including whole chicken grillers, chicken parts and other processed products.

Abanumay told Arab News that demand for poultry in the Kingdom, both for whole griller chickens as well as parts, would likely mean that despite fluctuations in the market there was strong demand for their produce.

The Brazilian Animal Protein Association reported in January that while poultry exports from Brazil had experienced a decline, some of the leading Arab importers “stepped up” their purchases. The figures showed that 35,800 tons of poultry was shipped to Saudi Arabia, up by 2 percent, with revenue climbing 4 percent year-on-year to $58.5 million.

Saudi Arabia was the premier Arab importer of poultry from Brazil in January, with the UAE ranked second. Total global raw and processed poultry exports from Brazil fetched $434.4 million in Jan. 2021, down 17.9 percent from Jan. 2020.

Abanumay said that the company was already making headway on plans to introduce new products to the market in 2021, as well as to bring new suppliers on board over the course of the year.


Pakistan’s central bank says studying feasibility of issuing its own digital currency

Updated 12 April 2021

Pakistan’s central bank says studying feasibility of issuing its own digital currency

  • State Bank governor says “comprehensive internal survey” being carried out to learn about trends in other countries
  • Global central banks developing digital currencies to modernise financial systems, ward off threat from cryptocurrencies, speed up payments

KARACHI: Pakistan’s central bank is conducting a “comprehensive internal survey” to study the feasibility of launching a digital currency in the country, the governor of the State Bank of Pakistan said on Monday.  

Global central banks are looking at developing digital currencies to modernise their financial systems, ward off the threat from cryptocurrencies like bitcoin and speed up domestic and international payments. China is one of the most advanced in its effort, and last month proposed a set of global rules for central bank digital currencies, from how they can be used around the world to highly sensitive issues such as monitoring and information sharing.
“There are many things involved and we are conducting a comprehensive internal study that what are the trends in other central banks,” governor State Bank Dr Reza Baqir said while speaking to journalists at the Pakistan Stock Exchange. “When our study would be completed the outcome will be shared … The experience of other central banks and may be the basis for our considerations.”

Pakistan central bank governor Dr. Reza Baqir speaks at a gong ceremony at the Pakistan Stock Exchange in Karachi, Pakistan, on April 12, 2021. (Photo courtesy: Pakistan Stock Exchange)

In an interview to international media last month, Baqir said introducing a digital currency would boost the government’s efforts at financial inclusion and allow it to make “progress in our fight towards anti-money laundering and towards countering terrorism financing.”
The Bank of Japan began experiments this month to study the feasibility of issuing its own digital currency, joining efforts by other central banks that are aiming to match the innovation in the field achieved by the private sector. The first phase of Japan's experiments, to be carried out until March 2022, will focus on testing the technical feasibility of issuing, distributing and redeeming a central bank digital currency (CBDC).

As digital currencies such as bitcoin gain more traction with mainstream companies and investors, and as private efforts like the Facebook-backed Diem seek approval, the onus is on central banks to accelerate plans to issue digital cash to fend off threats to their control over money.

The People's Bank of China is aiming to become the first major central bank to issue a CBDC, part of its push to internationalise the yuan and reduce dependence on the dollar-dominated global banking system.

The European Central Bank is also exploring the introduction of a digital euro, within the next five years. It’s running into opposition from Germany, though, where the Bundesbank worries that a digital euro could pose risks to banks.

A CBDC that gains wide acceptance in international trade and payments could ultimately erode the dollar’s status as the de facto currency of world trade and undermine US influence, many analysts say.

But cybersecurity experts also warn against threats to security as well as privacy risks.
“It provides opportunities for malicious hackers and cyber crooks to carry out frauds, scams, and theft through phishing and ransomware attacks,” Muhammad Khurram Khan, founder & CEO of the Washington DC-based Global Foundation for Cyber Studies and Research, told Arab News. “To build a secure, resilient and privacy-preserving ecosystem, the central bank of Pakistan needs to implement strong data security standards, processes, protocols, and technologies to protect against burgeoning cyber risks.”
“One major challenge associated with digital currencies is the consumer's privacy concerns,” Khan added. “Therefore, the central bank has to make sure to protect the rights of users for their privacy while they make transactions.”


Red Sea Development builds town for 14,000 employees

Updated 12 April 2021

Red Sea Development builds town for 14,000 employees

  • Red Sea project will have 50 hotels
  • First guests to be welcomed next year

RIYADH: Saudi Arabia’s Red Sea Development Company is building accommodation for some 14,000 people working on the mega project.
It signed a contract with Contracting & Construction Enterprises (CCE), to design and construct the infrastructure for the staff city, Al Eqtisadiah reported.
The contractor will also help to develop infrastructure designed to reduce carbon emissions.
The project will include the construction of roads, van lanes, pedestrian and cyclists’ paths, as well as the excavation and construction of central facilities.
The road and track network will be dedicated to sustainable transportation, the report said.
Lighting will also be designed to reduce energy consumption in line with the Red Sea Dark Skies Program.
The Red Sea project will consist of some 50 hotels providing up to 8,000 hotel rooms and more than 1,000 residential properties spread over 22 islands and six indoor sites, upon completion in 2030.
The project aims to receive its first guests next year as a new airport and the first of the planned hotels come online.
The new staff accommodation will welcome employees by the second quarter of 2021, the newspaper said.

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