Happy Tuesday! We hope you have been enjoying the Spring weather!
We
attended the Houston Maritime Center
& Museum’s Networking & Happy Hour Lecture at The Studio at East
River. Their Guest Speaker was Vincent
DiCosimo, Senior Vice President of Government Affairs at Targa Resources. Mr. DiCosimo’s lecture was titled, “How Will Recent
Trade Actions Impact the Houston Ship Channel and Our Region.” Mr. DiCosimo
gave his personal perspective on the situation.
He had three categories: tariffs, USTR Sec. 301, and the SHIPS Act. On
January 20, 2025, or Day 1 of President Trump’s administration he signed the “America
First Trade Policy” Memorandum this set in motion a plan to balance the scales
of the inequalities our American manufacturing or companies have in selling our
goods throughout the world. We import
more then we export in addition our tariffs are low compared to our countries around
the world. The plan was for tariffs and
other protocols to balance the books. The
President’s office gave the government agencies until February 13, 2025, to
respond to who gets US money in regard to current tariffs and what we export
and import from them. America has seen many of our jobs go overseas because it
is cheaper to import instead of making it here, this administration wants to
change this imbalance.
Mr.
DiCosimo started with a little background on how the President was given the
power to wield tariffs and other tools for international commerce. Since World War II Congress ceded certain
powers to the President and in 1977, the International Emergency Economics Powers
Act (IEEPA) was signed into law. This law
gives the President the authority to control international commerce after announcing
a national emergency in reaction to unusual and extraordinary threats. President Trump acted on Day 1! The United States Trade Representative (USTR)
Section 301 is something which is being used to balance the scales in commerce
especially towards countries like China.
There was an USTR Sec. 301 Investigation opened to investigate China
started prior to this administration, nonetheless this administration is running
with the ball. USTR Section 301 has us
looking at China and their control of the shipping industry across the world as
well as commerce deficiencies. Currently,
it is being considered to raise port fees against Chinese vessels which include
being constructed or operated as well as other factors, and the range of the
fees will be between $500,000 and $1.5 million.
Many container and chemical vessels stop at 3 to 4 ports on a single
trip to the U.S. thus with the possibility of these new fees they will reduce
the number of stops which means most will go to the larger ports while smaller
ports will be losing out on revenue from the reduction of traffic. The administration
has decided to phase in their approach to port fees and exclude some commodities.
They then decided to increase tariffs too. As of
the lecture America has implemented 145% tariffs on certain Chinese goods
imported to the US and China has reciprocated with its own tariffs of 130% against
us. A trade war has commenced between
the two largest economies and over the next coming weeks and months, and it should
be interesting to see how it will play out and the damage it will do to both
economies.
Mr.
Dicosimo spoke of the tariffs which were implemented last week and the fall out
of the stock market which ensued. The
administration gave a 90-day reprieve and placed a 10% tariff across the board on
many imported goods from all countries except China. Tariffs are not good for business for the
Houston, Texas, or the American economy.
It is expected the tariffs will cost an estimated $47 billion from the
Texas and Houston economy. It is
expected inflation will rise to 5% and government tax revenues will fall. There have been some exceptions to the
tariffs on some goods. He will be watching
closely!
Mr.
Dicosimo spoke on the SHIPS Act or Ships for America Act which was filed in
Congress in December. The SHIPS Act
addresses the shortage of American built ships, a shortage of Merchant Marines (American
Crews) and a plan to get us back on track.
Currently, the U.S. has less than 200 vessels which fly the American
flag. With the new port fees, it will fund
the National Security Trust Fund to help us build 250 vessels in the next ten
years. China currently is the leader in
ship building and they build 125 vessels a year. We want to resume our place as a leader in
ship building and we have implemented a joint US-Japan-South Korea strategy to
help us. We will be rebuilding our Merchant
Marine mariners, so we can fulfill the Jones Act with American crews. These two things are important parts of the
SHIPS Act. Well, we will try and keep up
on the status of this important legislation.
Mr.
DiCosimo had a couple closing remarks!
He doesn’t believe the administration’s plan will fulfill the three
pillars they have set out. Inflation will
not reduce. America’s economy will not
have 3% growth. Lastly, in time it may
bring manufacturing jobs back to America nonetheless it will take years for the
facilities to be built even with an influx of foreign investment to help. This pretty much wraps up the lecture!
Thank you, Vincent DiCosimo! You are an interesting and informative speaker and enjoyed your talk. Mr. Dicosimo gave us a
rundown of his thoughts of the current trends for our area and the state of
affairs on American shipping industry. His
biggest thought was to hold tight because we are going on a ride!
If
you would like more details on the next lecture and networking event at the Houston
Maritime Center & Museum for May 14, 2025, at 6 pm, please click the
link: MarineSafe811
with Ed Landgraf - Houston Maritime Center & Museum.
We would
like to mention the Houston Maritime Center & Museum is expected to
have their Grand Opening Celebration Dinner on Wednesday, June 18, 2025. They will be celebrating the opening of their
new location at the event for details, please click the link: Houston
Maritime 2025 Annual Celebration Dinner - Houston Maritime Center & Museum.
If
you need help with planning your next hydrocarbon liquids project in this low
carbon world, contact us via the email in the Blog and check out our ESC website!