NEW ORLEANS – Louisiana’s economy, which is deeply intertwined with international trade, faces significant challenges due to recent tariff implementations and the U.S. Trade Representative proposal to charge up to $1.5 million per call on Chinese vessels at U.S. ports. These federal initiatives affect both imports and exports.
Tariffs
Louisiana’s economy is vulnerable to retaliatory tariffs from trading partners. Soybeans, liquefied natural gas (LNG), and aircraft parts are among the high-volume products passing through Louisiana ports that are at risk of reduced demand and decreased competitiveness in foreign markets.
China, the European Commission, and Canada have all initiated counter-tariffs:
- China: On April 4, China announced a 34% tariff on all U.S. imports, effective April 10.
- European Union: On April 7, the European Commission announced counter-tariffs of 25% on a range of U.S. goods, including soybeans, sweet corn, rice, almonds, orange juice, cranberries, tobacco, iron, steel, aluminum, certain boats and vehicles, textiles, and various types of makeup. These tariffs are set to take effect on May 16 with others potentially later in the year.
- Canada: Canada announced a 25% tariff on $29.8 billion worth of U.S. imports effective March 13 and then on April 3, it imposed a 25% tariff on U.S. auto exports that do not comply with the U.S.-Mexico-Canada trade agreement, affecting approximately 8% of the 750,000 vehicles the U.S. exports to Canada annually.
The Louisiana Department of Agriculture and Forestry has expressed concerns about the potential decline in exports and its cascading effect on the state’s economy.
“We’re going to see higher prices across the board,” said Mike Strain, Louisiana Agriculture Commissioner. “From food costs to export declines, the pain will be felt in every region of the state.”
Imports will also be impacted. Companies reliant on steel and aluminum imports, for example, will likely experience higher costs resulting in elevated prices for consumers.
“They’re going to see the increase in Houston when they go to buy their next supply of steel coils and say, ‘Look, we’re going to have to raise our prices,'” said Ian Bertrand, co-owner of St. Martin Metal in Saint Martinville. The company gets their raw materials from suppliers in Texas who import from Canada and Mexico.
Proposed Fees on Chinese Vessels
The U.S. Trade Representative’s proposal to charge significant fees for Chinese vessels that call in at U.S. ports is meeting with resistance from industry groups across sectors. The aim of the fee is to curb China’s maritime dominance and promote U.S. shipbuilding but, according to George Lauriat, Editor in Chief of the American Journal of Transportation, the move ironically represents a grave threat to the U.S. port system and the nation’s supply chain.
According to Lauriat, if the proposal is enacted as currently presented, the result could “eviscerate the U.S. state port system.”
The proposed fees on Chinese vessels are a result of the U.S. Trade Representative (USTR) investigation initiated in April 2024 under Section 301 of the Trade Act of 1974. Following the investigation, the USTR determined that China’s maritime, logistics, and shipbuilding practices burdened U.S. commerce, prompting the proposed service fees:
- Chinese Vessel Operators: A fee of up to $1 million per entrance into a U.S. port, or up to $1,000 per net ton of the vessel’s capacity.
- Operators of Chinese-Built Vessels: A fee of up to $1.5 million per entrance into a U.S. port.
The American Association of Port Authorities said the proposed fees “would incentivize ocean carriers to consolidate traffic to the nation’s largest ports, while cutting out small and medium-sized ports from their routes.”
In addition, in a letter to the USTR, the U.S. Chamber of Commerce stated “Each port functions as a network of players: ocean carriers, a skilled labor force, warehouse facilities, logistics partners, trucking companies, railroads, maintenance facilities, cargo handling operators, and government entities. Port workers who recently reached labor agreements would now see reductions in work. Local and small businesses that benefit from a port’s presence could see significant reductions in business.”
The U.S. Chamber of Commerce emphasized the impact on small to medium sized ports, highlighting that the USTR’s proposal would impact the Port of New Orleans, particularly in relation to the export of soybeans, refined petroleum, aircraft parts, frozen poultry, paper & pulp, and plastic.
“We’re closely monitoring this very dynamic situation,” Port NOLA said in a statement. “We will continue to work with our customers and partners on adapting to market changes and meeting their supply chain needs.”
In a letter to the Chairs of the Section 301 Committee, World Shipping Council CEO Joe Kramek described the logistical problems that would be created if the fee on Chinese vessels is implemented.
“As carriers limit port calls to prevent multiplication of fees, large ports will become congested and small ones will lose traffic,” said Kramek. “The congestion will drive up prices – as occurred during the Covid-19 pandemic – while smaller ports would see reduced port-related employment and reduced service for regional businesses reliant on international trade.”
Retail
In a March 24 letter to the USTR, the National Retail Federation (NRF) and the Retail Industry Leaders Association (RILA) stated that the “proposed actions would severely injure the U.S. economy and consumers.” They argue that the proposed Section 301 fees would lead to significantly increased costs for imports and exports, adversely affecting a range of industry sectors including retail.
According to the NRF and RILA, costs generated as a result of the Section 301 fees will harm U.S. shipping interests and undercut the competitiveness of U.S. goods in foreign markets.
“In the interest of protecting U.S. businesses, consumers and supply chains, NRF and RILA oppose the proposed actions in this Section 301 investigation and respectfully urge the administration to consider other measures for addressing China’s dominance in the maritime sector. We encourage USTR and other agencies to continue to investigate the barriers and limitations on U.S. shipbuilding and other means by which to help revitalize the industry, without burdening those who rely upon it,” the NRF and RILA letter stated.
