Trump Tariff Urgency Drove September’s Shipment Surge — Panjiva
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Trump Tariff Urgency Drove September’s Shipment Surge

China 1758 Cons. Discr. - Apparel 214 Cons. Discr. - Autos 661 Cons. Discr. - Durables 107 Cons. Discr. - Retailing 156 Industrials - Capital Goods 265 Materials - Metals/Mining 482 Metals - Steel 360 Tariffs 1169 U.S. 3297

U.S. imports may have experienced a resurgence in growth in September after seaborne shipments climbed 7.3% on a year earlier, Panjiva data shows. As is normally the case the level of shipments was down vs. August though that may have been exacerbated by the impact of Hurricane Florence on east coast ports. Major hurricanes last year included Harvey in August and Irma in September.

IMPORTERS’ FEET BACK ON THE ACCELERATOR

Chart shows U.S. seaborne imports (upper panel) with change vs. a year earlier (lower panel).   Source: Panjiva

The bigger issue however is the potential impact of the widening trade war between the U.S. and China. As outlined in Panjiva research of September 18 the U.S. applied 10% tariffs to $200 billion of Chinese exports from September 24 following the imposition of tariffs to $50 billion of products across July and August. A surge in shipments from China ahead of the wider range of duties can be seen in the 8.7% jump in September after a 1.0% decline in August vs. a year earlier.

Outside China there were notable accelerations in shipments from India (16.4% higher after a 7.2% rise in the prior three months) and Vietnam (25.4% from 7.4%). The latter may reflect the start in shifts in production by Chinese manufacturers to other, lower tariff jurisdictions.

There was also a 2.8% drop in imports by sea from Mexico after a 17.7% surge in the prior three months. The recent resolution to NAFTA negotiations to create USMCA may herald a return to business-as-usual for cross-border trade.

SLOWING, BUT FAR FROM SHRINKING

Chart segments rolling quarterly growth in U.S. seaborne imports by origin.   Source: Panjiva

Among key Chinese exports to the U.S. that became subject to duties in September the most significant gains included home appliances (including microwaves under HS 8516, up 9.8% on a year earlier and refrigerators under HS 8418, up 15.3%) as well as pumping systems (HS 8414, which surged 23.6% higher) and valve systems (HS 8481 which rose 17.4%).

FRIDGES HOT, PUMPS BEING SUCKED IN

Chart segments U.S. seaborne imports from China by product (HS-4).   Source: Panjiva

The prospect of duties on autos as a result of the section 232 review of the industry has waned somewhat given ongoing trade discussions with Europe and Japan. Imports of autos and parts rose 8.3% vs. 2.7% in the prior three months, perhaps signalling concerns among manufacturers about the lack of new information in the case.

Elsewhere in industrial supply chains growth was relatively modest with capital goods (HS 84/85) up 3.4% vs. 4.8% over the previous three months. A 2.2% increase in shipments of iron and steel is remarkable given the imposition of 25% duties on most imports since June.

FUTURE TARIFF WORRIES DRIVING AUTOS DEMAND?

Chart segments U.S. seaborne imports by industry (based on HS-4 categories for autos, iron & steel and machinery/electronics).   Source: Panjiva

Outside of household appliances, demand for consumer goods remains robust. Imports of furniture rose 4.8% (slightly below the prior three months’ 5.5%) while apparel surged 8.9% higher than a year earlier. The determination of retailers to capitalize on the demise of Toys’R’Us to build market share ahead of the holiday season can be seen in a 3.1% rise in imports  of toys vs. a 2.3% decline in the prior three months at the start of the peak shipping season. There’s still two months of imports to go before the holiday window closes though.

DRESSING UP, TOYS BACK IN PLAY

Chart segments U.S. seaborne imports by industry (based on HS-4 categories for furnishings, apparel and toys).   Source: Panjiva

A resurgence in consumer confidence to the highest September 2000, shown by S&P Global Market Intelligence data, would suggest a drop in demand for imported goods – outwith tariff effects – may be less likely in the rest of the year. Business optimism has declined slightly but is still in firmly positive territory, supporting continued growth in industrial imports.

AMERICANS WANT TO BUY MORE

Chart compares sentiment surveys to monthly (dot) and quarterly average (solid) growth in U.S. seaborne imports. Calculations include S&P Global Market Intelligence data for ISM PMI and Conference Board consumer confidence.   Source: Panjiva

On a seasonal basis and using prior year’s experience the full year growth in imports could reach 4.9% for the full year. Indeed there would need to be a 16.4% drop in imports year-over-year in the fourth quarter to bring the full year to an unchanged level. The proof of the impact of President Trump’s tariffs will hinge critically on October’s data.

SHAPING UP TO BE A STRONG YEAR FOR IMPORTS, DEPENDING ON TARIFFS

Chart segments U.S. seaborne shipments by month.   Source: Panjiva

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