Logistics Strained by Coronavirus, Experts Say, but They Disagree on Whether 301 Tariffs Should Be Lifted
Supply chain disruptions due to China's lockdown to contain the coronavirus pandemic may end up not being as relevant as the worldwide economy shudders and stalls. Kurt Tong, former consul general to Hong Kong and a business consultant with the Asia Group, told reporters March 16: “You can have supply chain shocks that are being masked by the fact that there’s no demand for the goods.” He said the abrupt reversal of economic activity means “shipments are going to come down.” Tong and others were speaking on a webinar about trade and the coronavirus.
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Myron Brilliant, executive vice president of the U.S. Chamber of Commerce and its top trade official, said he's heard that Chinese factories are operating at 40% to 60% capacity on average. “It takes a while to ramp up,” he said. “I don’t think anyone should expect China to be operating at full capacity anytime soon.” Brilliant said it's hard to know how much disruption to the supply chain from South Korea and Europe will affect U.S. firms.
In response to an International Trade Today question about how fewer flights between the U.S. and China and Europe affect air cargo, Brilliant said, “I talked to a number of companies in the logistics space, and of course there’s been a great constraint on cargo. The burden is falling on UPS and FedExes and DHLs.” Brilliant said the government is consulting with express shipment carriers and also is trying to make sure it is staffed for inspections.
He said, “We’ve got to move commerce. We’ve got to move goods! We need to make sure we don’t have a cessation of our trade.”
Brilliant and Scott Paul, a supporter of protecting American industries, both seized on the crisis to argue their positions -- the Chamber, that tariffs are a drag on U.S. businesses' profitability, and Paul's Alliance for American Manufacturing, that more goods should be made in America.
Brilliant said of the administration, “I think they’re going to have to show some flexibility on tariffs. It hurts our country, it hurts employees.This is an issue we’ve been arguing for anyway, but the coronavirus makes it” more urgent, he said.
Paul, president of the Alliance for American Manufacturing, said that the Office of the U.S. Trade Representative has already granted exclusions for Chinese medical supplies needed for the pandemic, and he doesn't buy the Chamber's argument about the broader Section 301 tariffs. “I'm not sure what kind of stimulative effect it would have,” he said. “This is more about consumer confidence right now than it is the ability of small businesses to offer goods at an affordable price. The idea that Americans aren’t going out and buying footwear right now because of tariffs doesn’t strike me as a very honest argument.”