The Biden administration could ease the supply-chain crisis simply by removing the massive tariff it slapped on a relatively obscure piece of trucking equipment imported from China, experts say, but so far the administration has refused to budge.
In May, the Commerce Department imposed a 221% tariff on Chinese trucking chassis, specialized trailers that are used to transport shipping containers on the road. The chassis are used by truckers to deliver containers filled with all kinds of consumer goods to ports, rail yards, and stores.
That tariff is on top of the 25% tariff levied by the Trump administration on chassis from China, the world’s largest manufacturer. Combined, the tariffs add roughly $25,000 to the price of a chassis that used to cost about $12,000.
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At the time, the Commerce Department said the move was necessary because the U.S. chassis manufacturers had been devastated by the cheaper Chinese imports resulting in the layoff of hundreds of workers.
But the tariff also created a chassis shortage hindering truckers’ ability to move goods that are piling up across U.S. ports. Chassis moving out of the ports of Los Angeles and Long Beach plummeted 23% between April and September, according to the latest data from Pool of Pools, an organization that tracks chassis movement.
“It’s a 220% tariff on a very important piece of the supply network and just simply doing away with that tariff could do a massive amount of good very quickly,” Ryan Young, a senior fellow at the Competitive Enterprise Institute, a libertarian think tank, said at a recent webinar. “This is bad news for the entire supply web.”
The White House did not respond to multiple requests for comment. In a post last week on the White House’s official blog, the administration said that the Ports of Los Angeles and Long Beach have cleared out 60,000 chassis and have a commitment to remove another 28,000.
A coalition of U.S. chassis manufacturers in October urged President Biden to resist pressure to remove the tariff. They say the tariff has enabled them to hire hundreds of new workers and increase their production capacity by 400%.
In a letter to Mr. Biden, the group characterized calls to lift the tariff as a “smokescreen” that is “misguided, wrong and should be rejected.”
“The way to solve [supply chain] problems is not on the backs of American manufacturers and their workers,” the group wrote. “Tragically, removing the tariffs will only cause more American workers to lose their jobs without fixing the root cause of the supply chain problems.”
“This is no solution at all and would only serve to re-injure American manufacturers and their workers who suffered significant material injury at the hands of unfairly traded Chinese chassis,” the group said.
But even the ramped-up production won’t produce enough chassis to meet the immediate demand, which is already lagging three months behind.
The chassis shortage has been exacerbated by the labor shortage at ports, leaving hundreds of thousands of chassis idling at ports across the country. Those chassis are being used to hold empty shipping containers at ports as workers struggle to clear out the backlog.
Matt Schrap, chief executive of the Harbor Trucking Association, which represents Southern California port truckers, estimates there are at least 110,000 empty containers sitting on chassis at the ports of Los Angeles and Long Beach.
“From our perspective, it is a utilization issue,” he told The Washington Times. “We are constraining the chassis supply, but we are not effectively maximizing the use of the chassis. We are stuck in a storage conundrum.”
The shortage has also increased costs for truckers, who are already dealing with higher gas prices and inflation. Most truckers rent chassis from equipment providers and return it at the end, paying for the period it was used.
Mr. Schrap noted that some truckers who once waited 40 minutes for an open chassis are now waiting as long as seven hours.
“We don’t get paid unless we are moving goods,” Mr. Schrap said. “But if you go into the marine terminals, which are extremely congested right now, you spend a lot of time waiting. The chassis make a difference because that’s how you move a container.”