US-China trade war could result in new trade routes in shipping
While the US and China tussle over mounting trade tariffs, China is seeking new markets for exports especially in North Africa and this may invite new trade routes in shipping, according to an international shipping and logistics professional.
Nilud Fernando, a professional in international shipping and logistics, a marketer, business consultant told The Sunday Business Times: “We are currently observing a decrease in shipping lines traffic from China to the US, primarily due to increased tariffs. US imports from China have already dropped by approximately 30 per cent, and this figure is expected to reach 40 per cent. However, a significant 60 to 70 per cent of previous volumes are still being transported to the US from China.”
US imports from China amount to US$440 billion, and China’s imports from the US are US$ 145 billion. Amidst these developments, China is seeking new markets especially in North Africa and this may invite new trade routes in shipping, he added.
Mr. Fernando said currently there is a 90-day pause on increased tariffs for imports to the US, with the exception of China, which faces a 145 per cent tax. Other importing countries are subject to a 10 per cent tax. Sri Lanka currently faces a 12 per cent tariff, resulting in a total of 22 per cent. The exceptionally high 145 per cent tariff on goods originating from China might be reduced, although likely not to become zero, he noted.
“We are hopeful that the end of the 90-day grace period will lead to productive discussions between the two nations, ultimately resulting in a more balanced trade situation.”
He stated, should higher taxation be implemented, it might be beneficial for Sri Lanka to consider downward adjusting its own higher taxation rates to encourage increased imports from the US. “If the US and China become engaged in a rapidly escalating trade war, Sri Lanka should proactively seek opportunities to attract investors to make Sri Lanka as a semi production hub.”
Mr. Fernando also highlighted, certain goods exported to the US are not impacted due to the new proposed tariff structure under HS (harmonised system) code categorisation, even in the event of a further higher US imports tariff structure comes into effect.
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