With the Trump administration threatening to expand trade tariffs beyond steel and aluminum — primarily to punish China — America faces a “lose-lose situation” if foreign trade partners retaliate, according to a CSU, Channel Islands, economist.
Drilled down to Ventura County, agriculture products exported through the Port of Hueneme and high-tech companies with overseas operations would be among the obvious targets for countries seeking payback, professor Sung Won Sohn said.
“China could come in two ways. It could be outright retaliation,” said Sohn, who was attending the International Atlantic Economic Conference in London, “but what I’m more concerned about is non-tariff barriers.” For example, China could hold up delivery of perishable fruit because of a misspelling on a customs sheet.
Last week, trade war fears stemmed from the Port of Hueneme to Wall Street, where Dow Jones Industrial Average plunged more than 700 points Thursday, March 22, after President Donald Trump announced plans to impose tariffs on $60 billion in Chinese goods for what he said was the theft of American technology. Stocks rebounded slightly Friday.
At the Port of Hueneme, business is continuing as usual for now, said Kristin Decas, CEO and Port Director. “But, of course, customers are keeping an eye on what’s happening — will it start touching their commodities?” she added. “That becomes the question. There is more of a watchdog-type approach — what’s going to happen next?”
Dealing mainly in automobile imports and agriculture imports and exports, the Port of Hueneme, which handles over $9 billion in cargo a year, is generally insulated from fallout over American steel and aluminum tariffs, Decas said. She agrees with Sohn, however, that potential foreign retaliation is a bigger concern.
“It creates some questions in the market. People ask me all the time — What does it mean? What does it mean?” she said. “People are asking a lot of questions, triggering a discussion and creating anxiety.”
China, a top trading partner with the Port of Hueneme, responded to Trump’s proposed crackdown by threatening to impose a 15 percent tariff on 120 American products, including fresh fruit and wine.
The Trump administration’s strategy is to create economic confusion to help reduce American trade deficits with other countries, which might make deals favorable to the U.S. to win exemptions from proposed tariffs, Sohn said.
“The whole idea is deliberate uncertainty, rather than just spelling out in black and white, here are the things you have to do: A, B, C and D,” he said. “That’s not what the Trump administration wants.”
Whether the White House strategy works won’t be known for a year or longer, Sohn added.
“If the trade war spreads, the average person should worry because that’s a lose-lose situation for everyone,” he said. “We would see prices going up. There could be jobs lost in America. And this would be the worst possible situation. We might see the trade deficit decline, not by trading more but trading less.”