What We're Reading: BDP Trendwatch Week 2

US companies and consumers are paying bulk of tariff costs

American companies and consumers are paying almost the full cost of U.S. tariffs, and the impact of those duties on import volume magnifies over time, according to a paper circulated Monday by the National Bureau of Economic Research.

Traditional trade theory would suggest tariffs levied by the U.S. should cause foreign firms to lower prices and thereby force them to shoulder the cost of the duties. However, the study by Federal Reserve Bank of New York researcher Mary Amiti and professors Stephen Redding of Princeton and David Weinstein of Columbia shows the levies haven’t had a major impact on foreign export prices, suggesting American firms and consumers bear almost all the burden in most sectors as companies work to reorganize supply chains.

Source: Supply Chain Brain


Fed arms Trump’s trade doves with evidence of tariff damage

If President Donald Trump kicked off 2019 saying the U.S. was reaping “MANY billions of dollars from the tariffs we are charging China,” the Federal Reserve had perhaps the year’s final say on the economic impact.

While many people celebrated the holidays last week, the U.S. central bank published a study trying to quantify the effect of the disputes between the U.S. and its major trading partners, particularly China.

Source: American Journal of Transportation


China plans to send team to US for January 15 deal signing

The Chinese trade delegation plans to sign the first phase of its trade deal with the U.S. in Washington on Jan. 15, according to people familiar with the matter.

The plan is still to send its top negotiator, Vice Premier Liu He, to ink the deal, said the people, who asked not to be identified discussing the private plans. The team will be in Washington from Jan. 13 to Jan. 15, one of the people said.

The South China Morning Post earlier reported the dates. The group had originally aimed to travel earlier in the month, but had to alter its plans after U.S. President Donald Trump sent a tweet saying the deal would be signed Jan. 15 at the White House, according to the SCMP.

Source: American Journal of Transportation


Trade tensions drag manufacturing to lowest level since 2009

December 2019 was the fifth straight month in which the ISM manufacturing index contracted. Demand, measured by ISM's new orders index, also continues to slump as it sank to 46.8% in December from 47.2% in November.

ISM surveys multiple companies as part of its monthly index report. One company in the food and beverage sector said it was, "Starting to see suppliers try to pass on costs associated with tariffs. Uncertainty on the trade front continues to keep agricultural markets on the defensive."

Source: Supply Chain Dive


Fire erupts on Cosco mega boxship

A fire erupted onboard Cosco’s 10,000 teu containership Cosco Pacific over the weekend, causing the vessel to reroute.

According to a notice Cosco sent to customers, seen by Splash, the fire started from one of the containers while the vessel was enroute to Nhava Sheva, India from Port Klang in Malaysia. The vessel had to change its destination to Colombo for inspections.

The fire has been contained but the extent of damage remains unclear.

BDP International has been in touch with customers who may have shipments affected by this incident. Should you have any questions or concerns, please reach out to your local BDP representative.

Source: Splash 24/7