FTZ’ine September 2024
September 4, 2024
All Quiet On The Eastern Front
And that’s not a good thing.
East and Gulf Coast Ports are closed.
All of them.
Nothing in or out.
The two sides are not even talking at the moment and with the election so near, and so tight, it is not clear that President Biden will wade into the fray, or what impact that would have if he did. FTZers need to take immediate action to protect themselves from delays and surcharges.
The new government fiscal year starts today after a government shutdown was narrowly averted. House Republicans once again needed bipartisan support just to get a continuing resolution through the chamber. If the House and Senate remain split this way after November, it could mean at least another 2 years without a budget no matter who wins the White House.
Late last month Donald Trump recognized John Deere’s job transfers to Mexico at a rally in Pennsylvania. He proposed a 200% tariff on products imported after such transfers, casting U.S. manufacturing job transfers to Mexico as an election issue.
A loose electrical cable is believed to have caused the accident that destroyed the Francis Scott Key Bridge and shut down the Port of Baltimore for months. The U.S. and Maryland have sued to recover the costs of the accident.
Top Story: East And Gulf Coast Trade Shuts Down
Members of the International Longshoremen’s Association (ILA) union are picketing two dozen east and gulf coast ports this morning, after weekend talks failed to reach a deal.
“Nothing’s going to move without us — nothing,” said Harold J. Daggett, the president of the union, addressing picketers outside a PANY/NJ terminal in Elizabeth, N.J.
The United States Maritime Alliance (USMX) and the ILA are separated by disagreements on wage increases and the adoption of automation at the ports. The container lines have already announced dramatic ‘Emergency’, ‘Congestion’, and ‘Work Stoppage’ surcharges for freight wrapped up in the mess.
The ILA further said intervention by the Biden administration would not have the impact of restoring normal operations at the ports. That means there is no relief in site until the parties reach a new agreement.
President Biden can intervene in such labor disputes that threaten national security or safety, by imposing an 80-day cooling-off period under the federal Taft-Hartley Act. While such action would force workers back on the job, the ILA has said that such action would convert the strike to a slowdown. If true, Presidential action would not have any impact on the pileup at the ports and would simply irritate union workers at a critical point in the Presidential campaign.
Last week, Oxford Economics estimated that a strike could reduce U.S. gross domestic product by $4.5 billion to $7.5 billion a week while it continues. “That hit would be reversed once the strike is over, but we estimate that for each week the strike continues, it would take a month to clear the backlog, partly because West Coast ports are already approaching capacity,” the Oxford team said in a note.
It is the first time in nearly 50 years that the longshoremen on the East and Gulf Coasts, now numbering 45,000 workers, have gone on strike.
The ILA wants a $5-an-hour raise in each of the six years of a new agreement, a total of a 77 percent raise over the life of the contract.
USMX said its latest offer to the union would raise pay “nearly 50 percent” over the course of the contract.
The ILA last walked out across all East and Gulf Coast ports in 1977 in an action that lasted more than six weeks.
Tech Tip: CBP Adds FTZ Storage Benefit For Certain CTPAT Partners
In the middle of last month, Customs and Border Protection announced an additional benefit to members of its CTPAT Trade Compliance Program. With certain restrictions and additional requirements, goods subject to forced-labor enforcement action may now be stored in a foreign-trade zone, and do not need to be transferred to a Bonded Warehouse.
The CTPAT Program now consists of two different divisions, CTPAT Security and CTPAT Trade Compliance. Most importers are familiar with the legacy CTPAT Security Program designed to enlist a broad array of participants in international trade in the fight against terrorists and smugglers. The CTPAT Trade Compliance program adds trade compliance aspects, especially forced-labor compliance, to the supply chain features of the CTPAT Security program.
The CTPAT Trade Compliance program division is only available to U.S. and nonresident Canadian importers. So forced-labor merchandise can now be stored in an FTZ operated by a 3PL, but only if the importer is a member in good standing of the CTPAT Trade Compliance program. Local Port approval, and special documentation, is also required for FTZ storage of merchandise subject to detention.
Questions related to the new FTZ storage benefit for CTPAT Trade Compliance partners? Contact us at info@iscm.co.
USTR Announces Implementation Of New China Tariffs
Last month the United States Trade representative (USTR) announced changes to the trade remedy tariffs on goods from China. The updates, originally slated to take effect in August, started to be applied last week.
The new tariffs include 100% rates for Chinese EVs, 50% on chips, and 25% on batteries and steel. The 50% final duty rate for Chinese face masks, surgical gloves, and syringes was double the 25% originally proposed.
USTR did announce new tariff exclusions in five machinery categories, and staggered implementation of the new duties on ship-to-shore cranes.
The USTR notice includes two new categories for Chinese semiconductors; silicon wafers and polysilicon used in solar panels; due to start in 2025.
This final action marks the end of a more than two-year review of tariffs that had been imposed by former President Donald Trump.
The Biden administration also left in place Trump's tariffs on over $300 billion worth of Chinese goods ranging from toys and t-shirts to internet routers and industrial machinery at rates of 7.5% to 25%.
China has vowed retaliation against the "bullying" tariff hikes and argued that its EV industry's success is due to innovation, not government support.
The final tariff decision does provide some temporary relief for U.S. port operators who were facing a new 25% tariff on massive ship-to-shore cranes, an industry that China dominates with no U.S. producers.
The new duty will add millions of dollars to the cost of each crane. USTR said it will allow exclusions from the tariffs for any Chinese port cranes that were ordered prior to the May 14 initial tariff announcements and are delivered by May 14, 2026.
The 4 Billion Dollar Cable
Investigators working to pinpoint the cause of Baltimore’s Francis Scott Key Bridge collapse discovered a loose electrical cable.
When disconnected, the problematic cable triggered a blackout on the Dali similar to what happened as the ship left the Port of Baltimore on March 26th, according to documents released last month by the National Transportation Safety Board.
That led the U.S. Department of Justice to seek $100M from the two Singaporean companies, Grace Ocean Private Limited, the company that owns the cargo ship, and its operator, Synergy Marine Pte. Ltd. The State of Maryland followed with a lawsuit in federal court seeking to recover the total cost of the replacement of the Francis Scott Key Bridge, plus lost state revenue, including tolls and port fees.
The Dali was leaving Baltimore bound for Sri Lanka when its steering failed because of the power loss. It crashed into one of the bridge’s supporting columns, destroying the 1.6-mile span and killing six members of a roadwork crew.
The Dali first experienced a power outage when it was still docked in Baltimore. That was after a crew member mistakenly closed an exhaust damper while conducting maintenance, causing one of the ship’s diesel engines to stall, according to the earlier report. Crew members then made changes to the ship’s electrical configuration, switching from one transformer and breaker system — which had been in use for several months — to a second that was active upon its departure.
That second transformer and breaker system is where investigators found the loose cable, according to investigative reports. The engineers disconnected the cable as part of a simulation, which resulted in a blackout on the ship.
U.S. Manufacturing Woes Gain Traction On The Trail
Former President Donald Trump held a campaign event in rural Smithton, Pennsylvania, flanked by tractors manufactured by John Deere.
The former President threatened the company with a 200% tariff should he win back the presidency and it opted to export manufacturing to Mexico.
In June, John Deere announced it was moving skid steer and track loader manufacturing to Mexico where it was purchasing land to build a new factory. Layoffs began in August for U.S. employees.
Vice President Harris has embraced a more limited number of tariffs, and instead pledges tax breaks to encourage domestic manufacturing of low-carbon energy technology, biotechnology and other advanced industries. How voters in the swing state react to the Trump proposal may force reconsideration of that approach in a tight Presidential contest.
After the Pennsylvania event, Trump pledged to stop U.S. businesses from moving jobs out of the country.
“I want German car companies to become American car companies. I want them to build their plants here,” Trump declared during a speech in Savannah, Georgia.
Trump added that, if elected, he’d put a 100% tariff on every car imported from Mexico and that the only way to avoid those charges would be for an automaker to build the cars in the U.S.
The former president laid out a broad array of economic proposals during the Georgia speech (another key swing state) and promised to create a special ambassador to help lure foreign manufacturers to the U.S.
Additionally, he called for lowering the U.S. corporate tax rate from 21% to 15%, but only for companies that produce in the U.S. If the presidential race continues to be tight, and this issue gains traction with voters, especially undecided voters, we may see a shift in the Vice President’s position to become more aggressive on the imposition of new tariffs.
FTZ Staff Activity
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-161-2024) in FTZ 126 on behalf of Fracht FWO, Inc., Sparks, NV on September 3, 2024
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-162-2024) in FTZ 32 on behalf of Stockmatic, LLC, Miami, FL on September 3, 2024
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-163-2024) in FTZ 32 on behalf of JAS Forwarding (USA), Inc., Medley, FL on September 3, 2024
- FTZ Board Staff processed a Traditional Site Framework Subzone Application (S-164-2024) in FTZ 68 on behalf of Schenker, Inc., El Paso, TX on September 5 2024
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-165-2024) in FTZ 72H on behalf of Subaru of Indiana Automotive, Inc., Lafayette, IN on September 5, 2024
- FTZ Board Staff processed a processed a Termination (S-166-2024) in FTZ 174 on behalf of HomeGoods, Inc. Tucson, AZ on September 5, 2024
- FTZ Board Staff processed a Traditional Site Framework Subzone Application (S-167-2024) in FTZ 46L on behalf of HIT Promotional Products, Inc., Fairfield, OH on September 6 2024
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-168-2024) in FTZ 218B on behalf of Apollo Export Warehouse, Inc., Fort Pierce, FL on September 16, 2024
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-169-2024) in FTZ 18Q on behalf of L.Y.M. International Group (USA) Inc., Union City, CA on September 24, 2024
- FTZ Board Staff processed a processed a Minor Boundary Modification (S-170-2024) in FTZ 231 on behalf of JBF Warehouse & Cross Dock Logistics, Inc., Lathrop, CA on September 24, 2024
Foreign-Trade Zone Board Activity
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- Northern Mississippi FTZ, Inc. submitted an application to expand the ASF service area of Foreign-Trade Zone 262 to include Lafayette, Marshall, Panola and Tate Counties, Mississippi. MORE
- Space Exploration Technologies Corp. received authorization of production activity for internet satellite dish kits within Foreign-Trade Zone 50 in Hawthorne, California. MORE
- Mercury Marine received authorization of production activity for electric inboard and outboard motors within Foreign-Trade Zone 41 in Fond Du Lac, Wisconsin. MORE
- BMW Manufacturing Co. LLC received authorization of production activity for additional components of passenger motor vehicles within Foreign-Trade Zone 38 in Spartanburg, South Carolina. MORE
- voestalpine High Performance Metals LLC received authorization of production activity for wire rod within Foreign-Trade Zone 207 in South Boston, Virginia. MORE
- Uni Ag Group, LLC received authorization of production activity for bulk premixes within Foreign-Trade Zone 12 in McAllen, Texas. MORE
- USA Big Mountain Paper Inc. was denied authorization of production activity for spandex fiber in the production of disposable diapers/underwear/pads and wet wipes and domestic status is required within Foreign-Trade Zone 64 in Jacksonville, Florida. MORE
- Boss Laser, LLC submitted a notification of proposed production activity for laser machines within Foreign-Trade Zone 250 in Sanford, Florida. MORE
- Lucid Motors USA, Inc. received authorization of production activity for additional components of lithium ion batteries within Foreign-Trade Zone 75N in Casa Grande and Tempe, Arizona. MORE
- Gotion Inc. received authorization of production activity for lithium battery packs and lithium battery systems within Foreign-Trade Zone 22AF in Manteno, Illinois. MORE
- Willow Glen Terminal LLC received approval to operate its Saint Gabriel, Louisiana facilities as Subzone D of Foreign-Trade Zone 154. MORE
- Catalent Pharma Solutions, LLC received approval to operate its Winchester, Kentucky facilities as Subzone Y of Foreign-Trade Zone 29. MORE
- Merck, Sharp & Dohme LLC submitted a notification of proposed production activity for pharmaceutical products for research and development within Foreign-Trade Zone 49Y in Rahway, New Jersey. MORE
- J.J.C. International Distributors LLC dba Clar Company received authorization of production activity for galvanized steel products within Foreign-Trade Zone 32 in Miami, Florida. MORE
All Quiet On The Eastern Front:
And that’s not a good thing.
East and Gulf Coast Ports are closed.
All of them.
Nothing in or out.
The two sides are not even talking at the moment and with the election so near, and so tight, it is not clear that President Biden will wade into the fray, or what impact that would have if he did. FTZers need to take immediate action to protect themselves from delays and surcharges.
The new government fiscal year starts today after a government shutdown was narrowly averted. House Republicans once again needed bipartisan support just to get a continuing resolution through the chamber. If the House and Senate remain split this way after November, it could mean at least another 2 years without a budget no matter who wins the White House.
Late last month Donald Trump recognized John Deere’s job transfers to Mexico at a rally in Pennsylvania. He proposed a 200% tariff on products imported after such transfers, casting U.S. manufacturing job transfers to Mexico as an election issue.
A loose electrical cable is believed to have caused the accident that destroyed the Francis Scott Key Bridge and shut down the Port of Baltimore for months. The U.S. and Maryland have sued to recover the costs of the accident.
