The Trump administration recently announced plans for sudden port fares on Chinese-made vessels in San Diego Bay, which dominated global trade and frequently.
The idea is to limit China’s control at sea by making it more expensive to use vessels and theoretically pushing the state’s importers into relatively small US shipbuilding weapons.
According to estimates from the Port of San Diego, the new China tax, which will not take effect until mid-October, could cost importers around $150 on a car. There is concern from the shipping industry that in addition to tariffs, taxation could have a major impact on global trade.
US shipbuilding is virtually nonexistent compared to China and others. Critics argue that there is no way for the US to keep up, and the entire plan simply means an increase in consumer costs. President Donald Trump argues that it is important for the US to build a shipbuilding industry.
Question: Is the proposed ship collection built in China good?
economist
Caroline Freund Global Policy and Strategic School in San Diego, California
No: It serves as yet another tax on US consumers without encouraging investment in shipbuilding. Shipbuilding is a huge, complicated effort, and it takes years to expand its capabilities. A record of non-Trump tariffs means that the policy is unlikely to promote new investments, as taxation could disappear tomorrow. Additionally, China could retaliate with taxes on US-made aircraft, hurting the US aerospace industry and its workers.
David Ealy of San Diego State University
No: The United States cannot quickly create the capacity to produce ships in sufficient quantities to replace Chinese-made vessels currently docked at US ports. The currently charged collection increases the cost of transportation passed to consumers. Policies that encourage capital investment in the US shipbuilding industry and expand the workforce should be emphasized in the short term. Taxation must be delayed until the industry recovers further.
Ray Major, Economist
Yes: Ship collection is another tool in the toolbox that the US can use to encourage China and other countries to adopt a fairer trade policy. You can easily delete a trade contract when it is in place. The collection is 0.00375% of the value of the $40,000 car.
Kelly Cunningham, San Diego Economic Research Institute
No: Attempts to micromanage the economy are counterproductive and harmful. Top-down operations in shipping production have unintended consequences and dysfunction. By imposing complex rules and duties to transport goods and services, trade becomes more expensive and reduces productivity. The voluntary exchange of “free trade” benefits all participants and promotes specialization and division of labor. Economic development is not a zero-sum that makes profits at the expense of others losing. Returning “free” to free trade.
University of San Diego Aranzin
No: Economic infrastructure is not here for more shipbuilding in the US. One problem is that there is not enough steel produced in this country. The other is that labor is more expensive here and there is less desire to work in the manufacturing industry. These situations could improve in the future, but it will take a long time and the US will likely not approach China’s shipbuilding capabilities. In the meantime, consumers will be hurt as the prices of products carried by Chinese ships increase.
James Hamilton, San Diego, California
No: It’s going to be difficult to find American businesses and consumers. They are not affected through products that attempt to produce, buy and sell under this policy. The impact on US shipbuilding has taken years. And the very long-term investment needed to build more vessels is difficult to influence policies coming out of nowhere, and these words could have changed before they were printed.
University of San Diego Gnome Mirror
Yes: Nothing is said to be a “free market economy” like the special rates slapped on ships built elsewhere. That’s a genius idea. Why compete by building better, bigger ships or planning ahead? Anyway, who needs cheaper delivery and stability in global trade? All tariffs, consumers and businesses will barely notice the extra costs. Of course, I am confident that China will politely accept new collections without retaliation measures that could hurt US exporters. (Irony pointed out).
Executive
Phil Blair, Manpower
No: All tariffs and “port fees” clearly increase the cost of American goods. Both new costs go directly to the consumer. The US shipbuilding industry is very expensive compared to other countries, compared to wages paid for equal skills in other countries. That wage spread may be acceptable to Americans, but while it can be fully encouraged to pay jobs, consumers need to know why certain US industries cannot compete with other countries at prices.
Gary London, London Moder Advisor
No: I sympathize with measures designed to reduce China’s control over a wide range of sectors. However, a more realistic approach is a policy that encourages shipbuilding elsewhere around the world. This is no different from other tariff-driven domestic manufacturing targets. Manufacturing economics hardly works here, primarily due to the costs (and shortages) of the labor force. Why doesn’t everyone slap indiscriminately at tariffs, instead spreading more business to other countries?
Austin Neudecker, weave growth
No: Collection of vessels built in China increases the costs of US importers and consumers without providing strategic benefits. China controls shipbuilding because of infrastructure abandoned by domestic producers decades ago. Restructuring a competitive shipping industry takes years, requiring major government subsidies, and produces products that cost more. Punitive fees do not change these fundamentals, and rather than reviving US shipbuilding, they further disrupt trade demand and shift to other low-cost countries.
Jamie Moraga, Franklin Libya
Yes: if it is used as a negotiation tactic in a trade war. Otherwise, national security, stability and regional shipbuilding growth are important, but adding taxes to this year’s tariffs may not be wise. A measured approach is required. Too quickly, supply chain disruptions, higher costs, unemployment and rising prices are at risk. Rebuilding US shipbuilding requires a considerable amount of time and investment. A new taxation that was implemented soon could do more harm than good without a strong domestic infrastructure.
Chris Van Goder, Scripps Health
No: Like many of Trump’s ideas, it could be a very good long-term strategy, but not a good short-term economic decision. It takes years to increase the construction capabilities of its own vessels, and in that time the prices consumers pay will increase. Develop a long-term strategic plan, rather than a short-term response that doesn’t benefit the average person or business.
Bob Rauch, La Rauch and Associates
Yes: Collection aims to revive US merchant shipbuilding, which has been declining in recent decades. As China controls more than 50% of the world’s shipbuilding, this policy could promote diversification and counter-market abuse. Industry stakeholders are concerned about costs and trade disruptions, but fees only apply to Chinese-linked or Chinese-made vessels. The long-term impact remains uncertain, but the policy shows strategic changes to reduce dependence on China-built ships.
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