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Retailers rushing to beat tariffs

Imports at the nation’s major retail container ports have set a new record, reaching 2 million containers in a single month for the first time as retailers rush to bring merchandise into the country ahead of a now-postponed increase in tariffs on goods from China.

President Trump announced last weekend after a meeting with Chinese President Xi that the increase – and a threat to impose tariffs on all Chinese products – would be put on hold while the two countries conduct 90 days of negotiations. Official action to delay the tariff increase has yet to be announced, however.

“President Trump has declared a temporary truce in the trade war, but these imports came in before that announcement was made,” NRF VP for supply chain and customs policy Jonathan Gold said. “We hope that the temporary stand-down becomes permanent, but in the meantime there has been a rush to bring merchandise in before existing tariffs go up or new ones can be imposed. China’s abuses of trade policy need to be addressed, but tariffs that drive up prices for American families and costs for U.S. businesses are not the answer.”

According to the monthly Global Port Tracker report released on Friday by the NRF and Hackett Associates, U.S. ports it covers handled 2.04 million 20-foot equivalent units (TEUs) in October, the last month for which numbers are available. That's up 9% from September and up 13.6% from last year. The October number was the highest for a single month since Global Port Tracker began counting cargo in 2000. (A TEU is one 20-foot-long cargo container or its equivalent.)

November was estimated at 2.01 million TEU, a 14% year-over-year increase that would have been a new record if not for the October number. December – normally a slow month with holiday merchandise already on the shelves – is forecast at 1.83 million TEU, up 6.1% year-over year. Those numbers would bring 2018 to a total of 21.8 million TEU, an increase of 6.5% over last year’s record 20.5 million TEU.

Both year-over-year growth rates and total volume are expected to slow considerably in January, when 10% tariffs on $200 billion worth of Chinese products that took effect in September had been scheduled to increase to 25%.

“We see a significant slowdown in import growth in 2019 as the market adjusts to higher prices due to the Trump tariffs and the impact on consumer and industry confidence going forward,” Hackett Associates founder Ben Hackett said. “We project that imports at our monitored ports will have grown significantly in 2018 but that there will be no import growth in the first half of 2019 compared with the same period in 2018.”

November was estimated at 2.01 million TEUs, up 14% year-over-year. Imports are forecast to fall in 2019 "as the market adjusts to higher prices to the Trump tariffs and the impact on consumer and industry confidence going forward," said Ben Hackett, founder of Hackett Associates, which produces the Global Port Tracker for the NRF. The SPDR S&P Retail ETF is down 3% for 2018, the Amplify Online Retail ETF is up 5.8% for the period. The S&P 500 index is down 0.7% for the year to date.
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