US-EU Tariff Wars With China Spark Global Container Shortage

New Delhi, Jul 13 (KNN) In a development that's sending ripples through global trade, exporters worldwide are grappling with an unprecedented shortage of shipping containers.

This crisis stems from the latest salvo in the ongoing trade tensions between China and Western economies.

The European Union's 37.6 per cent tariffs on Chinese electric vehicles (EVs) took effect on Friday, closely followed by impending US tariffs set to begin on August 1. These US tariffs are particularly steep, reaching up to 100 per cent on EVs and 50 per cent on semiconductors from China.

The result? Chinese exporters are scrambling to ship as many goods as possible before these tariffs bite, creating a surge in demand for containers. Given China's outsized role in global trade, this has left exporters in other countries, including India, struggling to secure the steel boxes crucial for international shipping.

This container crunch compounds existing supply chain pressures. The ongoing Red Sea crisis, where Houthi rebels have been targeting commercial vessels, has forced many ships to take longer routes. This not only increases voyage times but also ties up more containers for extended periods.

"The scale of trade between the US and China has led to a spike in container demand, leaving Indian exporters with fewer options," said an unnamed official from India's Commerce Ministry. The ministry recently held a review meeting where exporters voiced their concerns about this sudden shortage.

The current situation highlights a structural weakness in global trade: the overwhelming dependence on China for container production. China manufactures an estimated 95 per cent of shipping containers worldwide, largely through heavily subsidised state-owned enterprises.

In response to these recurring shortages, countries like India and the US have initiated plans to boost domestic container manufacturing. However, progress has been slow.

In India, for instance, state-owned companies received orders to produce containers, but delivery has fallen far short of expectations.

As the container shortage persists, it threatens to further disrupt global supply chains already strained by geopolitical tensions and the lingering effects of the COVID-19 pandemic.

Exporters, shipping companies, and policymakers are now scrambling to find both short-term solutions and long-term strategies to address this critical bottleneck in international trade.

With no quick fix in sight, the container crisis serves as a stark reminder of the complex interdependencies in global commerce and the far-reaching consequences of trade disputes between major economies.

(KNN Bureau)