Trade war is hitting Albany, upstate ports
Effect of Trump-ordered taxes on contracts may be felt for years
Workers at the Port of Albany this month carefully lowered six shrink-wrapped subway cars that will eventually carry commuters in metropolitan Boston. Shipped from China on a freighter, the cars are squarely in the cross hairs of an escalating trade war that Beantown riders might end up paying for.
Tariffs ordered by President Donald Trump this summer apply to the rail cars, and to hundreds more that are expected to come through Albany in coming years, as part of a massive contract between a Chinese rail company and the Massachusetts Bay Transportation Authority.
Whether those tariffs derail imports remains unclear. This summer, the tariffs also hit ongoing imports to Albany of Chinesemade machinery used for power plant projects in New York and Pennsylvania, said Bill Ring, general manager of Federal Marine Terminals, which operates the Albany port.
“The orders for these (subway) cars are three years out and it will not halt the business, but the tariffs will have an impact,” Ring said. And since the power plant projects are already underway, with another set for the Great Lakes region, there are contracts in place and “orders will have to be filled,” he added.
Trade data on ports nationwide, compiled by The Associated Press and analyzed by the Times Union, showed that about half of the port’s $97 million in machinery imports during 2017 would have been impacted by the Chinese tariffs. For the first half of this year, about $8 million out of total of $46.7 in machinery imports would have been charged tariffs.
Tariffs are a kind of tax placed on imports. In July, Trump imposed tariffs on $50 billion worth of Chinese-made goods, and has
been threatening to impose tariffs on another $200 billion of imports from that country.
Current tariffs could add up to 25 percent to the cost of the Chinese-made subway car shells and imported components used to assemble them at a new $95 million factory in Springfield, Mass., built by CRCC, the Chinese-based manufacturer.
After being shipped to Albany, the car shells will be taken to Springfield for completion.
Each finished car is valued at $2.4 million, based on reporting from Masslive.com. If the tariff were to apply to all of that, it could raise the cost of each car by up to $600,000.
These potential price increases could be borne by the Boston transit system, said Lydia Rivera, a spokeswoman for CRRC MA, the owner of the Springfield factory. The company is preparing to seek waivers from the U.S. Trade Representative to lift the tariffs on the car shells and about 100 different rail car components from China, she said.
“We are now entitled to be reimbursed for these extra costs (tariffs) by our clients,” Rivera said. If the tariff waivers cannot be obtained, she added, the bill “ultimately will have to be paid by the taxpayers” of Boston.
“The MBTA continues to monitor the potential impacts on tariffs on the ongoing production of the 404 new vehicles,” said Lisa Battiston, deputy press secretary for the Massachusetts Bay Transportation Authority.
In 2014, CRRC received a $566 million contract from the authority to build 404 subway cars in Springfield in a to-be-built new Chineseowned factory, which state and local officials, and union leaders, hailed as the most significant industrial development in western Massachusetts in decades.
In 2016, the transit authority contracted CRCC for an additional 120 cars for $277 million starting in 2022. Altogether, tariffs could increase those total costs to the transit authority by up to $200 million or more.
The tariffs had threatened to scuttle a similar subway project between Chicago and the Chinese company, prompting Chicago Mayor Rahm Emanuel to visit China in July and return claiming he had saved the $1.3 billion deal, which also included a new assembly plant like the facility in Springfield.
To the north, New York ports from Buffalo to Ogdensburg are another front in Trump’s trade war, this time aimed at Canada. After he imposed tariffs in March on imports of Chinese and Canadian steel and aluminum, Canadians retaliated against U.S. exports of those commodities.
From 2017 to mid-2018, these ports handled about $8.3 billion in imported steel and aluminum, with about $5.5 billion that would have been included under the new Canadian tariffs, according to the Times Union analysis of The Associated Press data.
During that same period, these ports handled $5.4 billion in exports of U.S. steel and aluminum to Canada, of which $2.6 billion would have been hit by corresponding Canadian tariffs.
All this is being eyed warily by automakers, who warn that metal and auto components can cross the border several times between plants, which can mean adding tariffs with each border crossing, which would drive up the price of a vehicle.
Earlier this month, Trump warned he could cause the “ruination” of Canada by imposing additional tariffs on automobiles and related components, since major automakers have set up production on both sides of the border, with materials moving back and forth.
“Anything that is disruptive of our economic integration is of great concern,” said Garry Douglas, executive director of the North Country Chamber of Commerce. The group represents 3,200 companies in Clinton, Essex, Franklin, Hamilton and Warren counties, as well as in the Canadian province of Quebec.
Douglas said the economic relationship between New York and Canada has nothing in common with America’s relationship with China. “People ought to even stop calling it trade. We are post-trade, and now are in integrated production,” he said.
For example, Douglas said, the Plattsburgh-based Nova Bus company sends U.S. steel to be fabricated at a Canadian plant near Montreal, which then ships it back to Plattsburgh for final assembly. Similar cross-border exchanges are done by rail car maker Bombardier from its Plattsburgh facility.
Overall, between 2017 and mid2018, New York’s northern ports handled $16.1 billion of imported vehicles and components from Canada, while exporting $7.2 billion worth of those same commodities to Canada.
Newyorkispartofanoverall Canadian vehicle and component import market valued at more than $70 billion.
The Trump administration has used the threat of further tariffs on vehicles in an effort to force Canadian acceptance of new trade terms under the North American Free Trade Agreement, which also includes Mexico.
Douglas said that Trump’s tariffs to the north are self-harming, since more than 8,500 New Yorkers in his region work for U.S. affiliates of Canadian companies.
“In Clinton County alone, about 15 percent of our workforce is linked to Canadian investment,” he added.
Douglas also discounted Trump’s oft-repeated claim that the U.S. must punish Canada for not allowing complete access for American dairy products, adding that Canada imports five times more U.S. dairy products than the U.S. imports from Canada.