Almost everything leaving Northwest ports for China soon to be hit with tariffs

Sep 18, 2018

The Chinese government announced on Tuesday that it would impose tariffs on $60 billion more of U.S. exports. This widens the range of Pacific Northwest companies caught in the trade crossfire.

China had previously slapped tariffs on food imports, including Pacific Northwest fruit, beef, fish and wine. Now most everything else leaving the region's ports and air cargo halls is subject to added tariffs from 5 percent to 10 percent.

"It seems like they are hitting everything in sight to a large degree," said Robert Hamilton, who advises Washington's governor on trade policy.

Targets of local interest that caught Hamilton's eye include industrial machinery, high-tech medical equipment and wood. China has become a major importer of timber from Northwest forests. Those logs will be subject to a 10 percent tariff beginning next week.

Reduced overseas demand may give domestic U.S. sawmills and veneer mills a break according to industry data provider Forest2Market.

"These mill facilities may benefit from increased log supply and lower pricing due to restricted export markets," Forest2Market analyst Joel Swanton wrote.

The latest escalation in U.S.-China trade tension was spurred by Monday's announcement from the White House and the United States Trade Representative that the U.S. will impose tariffs on $200 billion worth of Chinese-made goods starting next week. The trade office said the new tariffs were in response to China's continuing "theft of American intellectual property and forced transfer of American technology."

"For months, we have urged China to change these unfair practices, and give fair and reciprocal treatment to American companies," President Donald Trump said Monday. "We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly. But, so far, China has been unwilling to change its practices."

The U.S. tariff will start at 10 percent, then rise to 25 percent on January 1 unless negotiators make progress eliminating "China's harmful acts, policies and practices," the USTR said.

Rep. Dave Reichert, a Republican from Washington state who is not seeking reelection this fall, expressed dismay at the additional tariffs announced by the Trump administration, which triggered the Chinese retaliation.

"Instead of punishing China, today’s announcement places the burden on American families, manufacturers, and farmers, who will pay the higher tariffs and bear the brunt of retaliation," Reichert said in a prepared statement late Monday.

One notable Pacific Northwest export — Boeing aircraft — is not targeted by a new tariff. However, Hamilton observed that no Chinese airline has placed a new order for Boeing jetliners this year, which is unusual.

"There are other ways to go after the U.S.," Hamilton said by telephone Tuesday from Seattle. "It doesn't have to be just tariffs."

Dennis Muilenburg, Boeing CEO, spoke with analysts several days ago about what this means for the aerospace giant.

"Both countries are motivated to have a healthy aerospace industry,” he said. “China needs the lift.”

He said that over the next two decades, Boeing forecasts about 18 percent of the global demand for new planes will come from China. “The population that is moving in to be the air traveling public in China is creating a demand there,” he said.

9/27/18 Editor's note: this story has been updated to reflect the range of the tariffs that were finalized after the story was first reported.