U.S.-China trade war is rerouting U.S. import flows -report

Nexen Tire

10/04/2019 23:37

By Lisa Baertlein
    LOS ANGELES, April 10 (Reuters) - President Donald Trump's
trade war with China has U.S. companies shifting purchases of
tariff-targeted products like furniture, refrigerators and car
tires to countries such as Vietnam, South Korea, Taiwan and
Mexico, according to a new analysis released on Wednesday.
    Trump's decision to slap tariffs of 10 to 25 percent on
about $250 billion of Chinese goods has roiled U.S. retailers
and manufacturers, who are scrambling to avoid potentially
crippling cost increases.
    Overall U.S. imports of containerized freight from China
fell 6.4 percent during the first quarter as buyers worked off
product stockpiled ahead of tariff increases and rerouted orders
 to lower-cost countries, S&P Global Market Intelligence's trade
data firm Panjiva said in the report.
    U.S. imports of Chinese-made furniture by retailers such as
IKEA, Home Depot  HD.N , Target Corp  TGT.N  and Room to Go fell
13.5 percent in the first quarter. That was partly offset by a
37.2 percent rise in shipments from Vietnam and a 19.3 percent
increase in imports from Taiwan, Panjiva said.
    The change also affected home appliances.  
    Imports of Chinese refrigerators fell 24.1 percent during
the quarter, when shipments from South Korea and Mexico jumped
31.8 percent and 32 percent, respectively. 
    "A major factor in that shift has been a rearrangement in
supply chains by Samsung Electronics and LG Electronics,"
Panjiva said in the report.
    The auto industry has also been rethinking trade routes.
    Tire imports from China slumped 28.6 percent during the
first three months of the year. At the same time, U.S. sea ports
saw a 141.7 surge in product from Vietnam and an 11.1 percent
increase in tire shipments from South Korea. Hankook Tire
 161390.KS  and Nexen  002350.KS  are among the suppliers
picking up the new business, Panjiva said.
    U.S. companies are also shifting factory investments in the
wake of the China trade tiff, which a trio of economists
estimate has already cost U.S. consumers and companies $19.2
billion.
    Ohio-based Cooper Tire & Rubber Co  CTB.N  in December said
it formed a joint venture with Sailun Vietnam Co Ltd.
 601058.SS  to build a truck and bus radial tire factory near
Vietnam's Ho Chi Minh City. 
    "We are excited about this addition to our manufacturing
footprint, which diversifies our sourcing to protect against
risk, including tariffs," Cooper Chief Financial Officer
Christopher Eperjesy said in February, when the company
announced a $34 million write-down on the value of a joint
venture manufacturing project in China.

 (Reporting by Lisa Baertlein in Los Angeles
Editing by James Dalgleish)
 ((lisa.baertlein@thomsonreuters.com; +1 213 955 6742; Reuters
Messaging: lisa.baertlein.thomsonreuters.com@reuters.net))