“The Wall Street Journal reports that Walmart, Target, Costco, and Home Depot are among the major retailers to adopt the “if you want something done right, do it yourself” approach to importing goods. Worker shortages and COVID-19 protocols have slowed trans-Pacific shipping considerably—it now takes about 80 days to transport items from Asia to the U.S., about twice as long as it did before the pandemic, the Journal reports.”
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“many of the bottlenecks are domestic issues. For example, major ports in Europe and Asia operate around the clock, but American ports run at about 60 percent capacity because they close at night and on Sundays. Even when dozens of ships are waiting to be unloaded, inflexible union rules that govern dockworkers’ and truckers’ hours make it difficult to meet swelling demand.
By chartering smaller, private ships to carry their goods, retailers like Walmart are hoping to bypass the backlogs by landing at smaller ports up and down the east coast. That will cost more money—and those costs will be passed onto consumers—but that’s better than running out of inventory during the Christmas rush. Home Depot, for example, is relying on chartered ships to deliver only a small percentage of its overall inventory with a focus on high-demand items like plumbing supplies, power tools, holiday decor, and heaters, the Journal reports.
Getting goods onshore is only half the battle. There are plenty of other bottlenecks to be navigated, like a 25-mile freight train backup that occurred at a major shipping facility outside Chicago earlier this year. At the port in Savannah, Georgia, The New York Times reports that workers are “running out of places to put things” as they unload ships, snarling both ground- and sea-based transportation.”
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“”The coronavirus pandemic has snarled global supply chains in several ways. Pandemic checks sent hundreds of billions of dollars to cabin-fevered Americans during a fallow period in the service sector. A lot of that cash has flowed to hard goods, especially home goods such as furniture and home-improvement materials. Many of these materials have to be imported from or travel through East Asia. But that region is dealing with the Delta variant, which has been considerably more deadly than previous iterations of the virus. Delta has caused several shutdowns at semiconductor factories across Asia just as demand for cars and electronics has started to pick up. As a result, these stops along the supply chain are slowing down at the very moment when Americans are demanding that they work in overdrive.””
“The Commerce Department’s role and responsibilities have grown in size and complexity, while its capabilities and resources have not. This shift reflects the nature of the competition with China (and one of the reasons the analogy to a “new Cold War” is flawed): Economic security and advantages in non-military technology have outsize importance compared to traditional military strength. That’s still crucial, of course, but much of the day-to-day contest happens in the arena of commerce. Just as other departments, like Treasury and Homeland Security, have been revamped and restructured as their relevance to national security grew, the Biden administration needs to reform the Commerce Department’s resources, structure and authorities if its China strategy is to succeed.”
“Right now, distribution networks across the world are massively congested.
“Los Angeles — which is a major port of entry for the United States — New York, and New Jersey are all pretty full up,” says O’Leary. “We’re hearing reports of delays of weeks for getting things cleared.”
“Containers are not moving out of ports and onto trains quickly enough,” explains Chris Tang, a UCLA business professor specializing in global supply chain management. “And on top of that, all of the warehouses in the Midwest are full. So everything is stuck.”
An increase in online shipping in part of what’s driving the congestion. Meanwhile, the complications of Brexit and the internet’s beloved container ship Ever Given — both of which dramatically disrupted global supply chains — certainly aren’t helping ports empty themselves out faster.
Even more pressing, however, is a shortage of truck drivers. There just aren’t enough trucks on the road to pick up as much stuff as we’re currently shipping around the world. “We’re talking tens of thousands fewer truck drivers than we need,” says O’Leary.
And as stuff sits in warehouses, waiting to be picked up by increasingly scarce truck drivers, the price of storage goes up, adding to overall shipping costs. “It used to be around $3,000 per container,” Tang says. “Now the price is closer to $20,000.” The skyrocketing costs mean that companies selling luxury goods will take more warehouse slots, since they can afford them, while lower-priced goods, like books, compete for what’s left.
Barnes & Noble CEO Daunt notes that books do have one big advantage over other goods when it comes to shipping: They’re durable. “The reality is that books are fantastic because they don’t really perish, so you’re able to print lots of them in advance,” he says. “They’re incredibly robust, so you can send them through the most basic of supply chain routes. They’re not strawberries or peaches or delicate things.”
But right now, even the most basic of supply chain routes are finding themselves overwhelmed.”
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“One of the big underlying problems when it comes to printing and shipping books is the same labor shortage that’s currently roiling the rest of the country. There aren’t enough press operators to get books printed, and then there aren’t enough truck drivers to get them to bookstores. Wages have gone up, but there still aren’t enough people working.
“In the whole national workforce, you’ve got 8.4 million unemployed but 10.9 million open jobs,” says Baehr. “That’s a two and a half million-person shortage, period, and that’s across all buckets. The book industry is getting hit with that just as much as the paper industry is getting hit with that just as much as the transportation industry is getting hit with that. It all just compounds on itself. It’s just a rough spot right now for the book business.”
“Simply put, the working-age population in the US has stopped growing,” says Gad Levanon, founder of the Labor Market Institute. “And the working-age population without a BA is shrinking quite rapidly.” That’s a major issue for the industries we’re discussing here because in general, people with college degrees prefer not to work in warehouses, as truck drivers, or in printing presses.”
“At the core of former President Donald Trump’s aggressive trade policies was a relatively simple—perhaps overly simplified—promise: Tariffs on Chinese-made products would drive manufacturers out of China.
“Many tariffed companies will be leaving China for Vietnam and other such countries in Asia,” Trump claimed in May 2019, about a year after his tariffs were first imposed. “China wants to make a deal so badly. Thousands of companies are leaving because of the Tariffs,” he tweeted a few months later, suggesting that the outflow was already underway. “If you want certainty, bring your plants back to America,” Robert Lighthizer, Trump’s U.S. trade representative, lightly threatened in a New York Times op-ed in May 2020, as the trade war’s second anniversary arrived.
But the tariffs failed to achieve that primary policy aim, according to a new paper published by researchers at the University of Kansas and the University of California, Irvine. Roughly 11 percent of multinational companies exited China in 2019, the first full year in which tariffs were in place—a significant increase from previous years. But the overall number of multinational firms operating in China actually increased during that same year, as foreign investment continued to flow into China even as the trade war ratcheted up costs.
In fact, the number of U.S.-based multinationals in China actually increased from 16,141 in 2017 to 16,536 in 2019. Non-U.S. companies were more likely to exit China during 2019 despite not being subjected to Trump’s tariffs.
“We estimate that less than 1 percent of the increase in U.S. firm exits during this period was due to U.S. tariffs. And U.S. firms were no more likely to divest than firms from Europe or Asia,” researchers Jiakun Jack Zhang and Samantha Vortherms wrote in The Washington Post this week.”
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“Trump is no longer running U.S. trade policy, but his failed tariffs on Chinese imports are still in force. Lighthizer’s replacement in the Biden administration, U.S. Trade Representative Katherine Tai, has said the tariffs provide “leverage” over China.
But that perspective is no more grounded in reality than Trump’s promises that his tariffs would cause companies to flee China. American consumers are bearing nearly 93 percent of the costs of the tariffs applied to Chinese goods, according to a recent report from Moody’s Investors Service. How is this giving the White House leverage over China?”
“Even the mere prospect of new trade restrictions has prompted solar installers, who are already facing supply issues and higher labor costs, to pull back on some projects. At the same time, Biden wants to avoid being seen to be weak on China — another centerpiece of his campaign pitch and early policy agenda.
The conflict pits parts of the solar industry against each other. American solar panel manufacturers are petitioning to expand existing tariffs on Chinese products to those coming from Malaysia, Thailand and Vietnam. Backers of the tariffs and trade restrictions say they would allow panel makers in the U.S. to expand production. Added duties would also accomplish another of Biden’s goals: punishing China over the use of forced labor.
But the Solar Energy Industries Association, which represents developers that install panels and build solar projects, says imposing tariffs on those three nations would hit more than three-fourths of imports and about half of the total solar panel supply in the U.S. “That would have a pretty devastating impact on the solar industry,” said Abby Hopper, CEO of the trade group.”
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“Other trade issues before the administration could also hamper solar build-out. Commerce is weighing whether to extend separate Trump-era tariffs on Chinese solar for another four years, and the Department of Homeland Security is considering whether to increase trade restrictions on Chinese panel components, like it did this summer.
In June, the Biden administration blocked the import of products containing silicon materials from a key Chinese supplier, Hoshine, over concerns it uses forced labor in its manufacturing. The company operates in the northwestern Chinese region of Xinjiang, where the ruling Communist Party has interned hundreds of thousands of ethnic Uyghur Muslims.
The policy has resulted in Customs and Border Protection detaining some shipments of solar panels coming in from China.”
“Biden’s words of support for the protesters—some of whom waved American flags as they demanded “libertad”—are nice. Actions would be better. And there is plenty the U.S. could, and should, do to aid Cubans in their fight against authoritarian communism.
For starters, Congress could lift the 59-year-old U.S. trade embargo against the island country.
Some leftists blame the embargo for impoverishing Cuba, but this is misdirection. Communism has destroyed Cuba’s once-prosperous economy. Still, the trade embargo, in place since 1962, has plainly failed to accomplish its primary goal of toppling the Cuban regime. If anything, it has helped to strengthen it by giving former President Fidel Castro and his successors a way to deflect blame for communism’s failures—a strategy that Cuban President Miguel Díaz-Canel also deployed during the initial wave of protests in July.
From America’s perspective, what has the embargo accomplished? That it remains in place nearly three decades after the fall of the Soviet Union suggests that America has failed to learn the primary lesson of the Cold War: Economic development is the best weapon to aim at communism.”
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“where is the evidence that disengagement is working? Demanding political reforms before economic changes is exactly backward—and again ignores the lessons of the Cold War.
Economic freedom is the key to other kinds of freedom. Consider what happened when the Obama administration loosened some of the rules on American travel to Cuba as part of an effort to reestablish diplomatic relations. Even with the trade embargo still in place, that slight policy change induced then–Cuban President Raul Castro to relax state controls on private commerce. While accurate figures on Cuba’s economy are understandably difficult to come by, a 2017 Brookings Institution report estimated that “the number of authorized self-employed people (cuentapropistas) rose from some 150,000 in 2008 to about 580,000 in 2017.”
Increasing entrepreneurship reduces Cubans’ reliance on the Communist state. And when people are allowed a little freedom, they tend to want more of it. ”
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“calls for the White House to allow private companies to beam internet service into Cuba to circumvent the government’s blackout and help protesters organize. Technologically, this is possible: Balloons anchored miles offshore could broadcast mobile internet signals into Cuba. The same tech was deployed near Puerto Rico after two devastating hurricanes crippled the island’s digital infrastructure in 2017.
Even if Biden does nothing more than re-instate Obama’s travel and economic policies and call on Congress to end the failed trade embargo, it would signal to the Cuban people—and to the country’s potential future leaders—that the United States recognizes trade and tourism as vital economic and political lifelines for the island’s long-suffering residents. It also would remove the biggest excuse that Cuba’s government uses to distract people from the failings of communism.”
“The bureaucratic process established by the Trump administration to determine which American companies should be exempted from paying tariffs on imports from China is a black box of “inconsistencies” and poorly documented decision-making, according to a new audit.
In a report published last week, the Government Accountability Office (GAO) cast a critical eye on the so-called “tariff exclusion process” created in 2018 as part of the Trump administration’s efforts to slap tariffs on a wide range of imports from China. The process, overseen by the Office of the U.S. Trade Representative, allowed American businesses to appeal to the federal government for permission to not pay tariffs if they could demonstrate that a given product was not available from other sources, or if a business faced “severe economic harm” due to the tariffs.
Between 2018 and 2020, American businesses submitted more than 53,000 exclusion requests. The vast majority—87 percent—were denied, and most of the denials were on the grounds that the company failed to demonstrate sufficient economic harm to the Office of the U.S. Trade Representative, the GAO found.
In other words, federal bureaucrats reviewed tens of thousands of statements from companies pointing out how the Trump administration’s tariffs would cause economic harm—because, yes, Americans paid for the tariffs—then discarded most of those requests because the harms were not “severe” enough.
What’s even worse is that there’s very little in the way of objectivity or due process afforded to companies that had their exclusion requests denied. Soon after the tariffs were imposed, members of Congress warned that the exclusion process lacked “basic due process and procedural fairness” and that it could be “abused for anticompetitive purposes.” As Reason previously reported, business owners have complained that simply getting a decision one way or the other can take months. And there is no way to appeal the rulings.
The new GAO report confirms some of those concerns.”
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“tariffs are always about protecting certain industries, and protecting certain industries always invites influence-peddling.”
“American companies were glad to see Biden review Trump’s trade policies toward China, but eight months later, they have seen little change on tariffs or other issues bedeviling their business in the world’s second-largest economy.”
“Despite being in place since 1962, the trade embargo has plainly failed to accomplish its primary goal of toppling Cuba’s regime. If anything, the policy has likely bolstered the regime by allowing the communist government to blame the U.S. for its own economic problems, as Cuban President Miguel Díaz-Canel did on Sunday. The trade embargo has contributed to the Cuban government’s impoverishing of millions of Cubans while limiting Americans’ economic freedom, too. That it remains in place nearly three decades after the fall of the Soviet Union shows that America’s foreign policy towards Cuba has failed to learn the primary lesson of the end of the Cold War: Economic freedom is the best weapon to aim at communism.”
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“Cuba’s government is authoritarian, but there should be no mincing of words about this. Communism is what broke Cuba. The authoritarianism on display is merely the natural evolution of communist regimes—a pattern of economic and political repression that has been tragically repeated in too many corners of the world during the past century.
Biden’s statement is right to conflate the lack of economic freedom with long-running political repression in Cuba. That’s exactly why America’s trade embargo is such a backward strategy, one that assumes economic and political freedom aren’t fundamentally linked.
Look at what happened when the Obama administration loosened some of the rules banning Americans from traveling to Cuba as part of an effort to reestablish diplomatic relations. Even with the trade embargo still in place, that slight policy change helped create a boomlet of entrepreneurship amid then-Cuban President Raul Castro’s thawing of tight state control over private businesses on the island.”
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“Since taking over as Cuba’s president in 2018, Díaz-Canel has cracked down on Cuba’s private sector. Former President Donald Trump helped him smother the nascent economic reforms by reversing some of Obama’s attempts to normalize U.S.-Cuba relations and by slapping new economic sanctions on Cuba just before leaving office in January.
Advocates for maintaining the embargo against Cuba argue that increased trade and tourism would enrich and strengthen the communist regime while failing to aid most Cubans. This was basically Trump’s approach—one that reflects longstanding hardline conservative views about how to handle the communist state just 90 miles from the Florida coast. “There is zero reason to delude ourselves into believing that ‘engagement’ will get the tyrants in Havana to change their ways,” Sen. Marco Rubio (R–Fla.) wrote in January.
This is a clever misdirection. Where is the evidence that disengagement is working? The embargo has been in place for nearly six decades. How much longer should we wait? How much longer should the people of Cuba have to wait?”
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“As the people of Cuba strive to cast off their communist oppressors, the United States can do more than simply offer words of support. Undoing Trump’s restrictions on the remittances that many Cuban Americans send to their families still trapped under the communist regime would be a great place to start.
If Biden were to reinstate Obama’s travel and economic policies toward Cuba and call on Congress to end the failed trade embargo, it would be unlikely to immediately change the reality on the ground in Havana. But it would signal to the Cuban people—and to the country’s potential future leaders in the event of a full-scale toppling of the regime—that the United States is prepared to let trade and tourism serve as vital economic and political lifelines for the island’s long-suffering residents. And it would remove one excuse the Cuban government routinely uses to dismiss the failings of communism.”
“China had become the second-largest export market for American-made cars by 2017, the last full year before Trump’s trade war began. After a series of tit-for-tat tariff increases between the U.S. and China, however, American automotive exports to China fell by more than one-third. Higher tariffs on imported car parts from China raised costs for automakers in America, while China’s retaliatory tariffs on American-made cars hiked prices and reduced demand in China.
To avoid those costs and to evade increased uncertainty, some carmakers began shifting their supply chains—but not in the direction the White House was hoping.
BMW, for example, shifted much of the production of its X3 sport-utility vehicle from Spartanburg, South Carolina, to China after reporting that tariffs had cut the company’s American profits by about $338 million in 2018. The higher costs imposed by the trade war caused Tesla to announce that it was “accelerating construction” of a new plant in Shanghai.
Overall, the number of American automating jobs peaked in September 2018, shortly after Trump’s trade war began, and then declined during 2019 and 2020.
The signing of the “phase one” trade deal with China did little to stop or reverse those shifts. Even though China pledged to increase its purchases of American-made vehicles and car parts as part of the agreement, exports are still lagging well behind their pre-trade war totals, according to the PIIE report.”
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“Trump believed that hiking tariffs would reduce America’s imports from China, allowing the gap between the value of those imports and the value of America’s exports to fall. What he failed to grasp, however, is that many of those imports—especially when it comes to manufactured goods—are materials necessary for making the items that American companies end up exporting back to China: like cars.
Higher costs imposed on imports ended up slowing American exports—and thus the trade deficit actually grew. Meanwhile, companies could avoid the cost of Trump’s tariffs by shifting production out of the United States, and some chose to do that.
Biden, so far, seems unwilling to remove Trump’s tariffs. By announcing a misguided “Buy American” policy for government procurement, Biden is also expanding on some of the Trump administration’s protectionist manufacturing policies.
If the past few years are any indication, all Biden will likely accomplish by this is to further erode America’s industrial base by trading away automaking jobs in exchange for the appearance of “toughness.””