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Anders Gustafsson, president and CEO of of Volvo Cars USA, visits the automaker's Berkeley County campus in this April 6, 2018 photo. Gustafsson said tariffs could force the automaker to shift production of S60 sedans from the plant off Interstate 26 to a factory in China. File/Grace Beahm Alford/Staff

South Carolina's automakers are sounding the horn again that tariffs will lead to production shifts and financial losses if a trade dispute between the United States and China isn't resolved soon.

They're among the strongest statements yet in a trade war that threatens billions of dollars worth of Palmetto State products exported each year to China.

So why is the Port of Charleston reporting record containerized cargo levels?

It has a lot to do with supply chains. It can take months or years for businesses to shift the way they source parts and products, and there hasn't been enough time for that to show up in the cargo statistics.

"Automotive is a very strategic, long-term sourcing industry and those companies will make strategic decisions over the course of time — nothing immediate," said Jim Newsome, CEO of the State Ports Authority.

Other companies, like discount retailer Dollar Tree — which opened a 1.5 million-square foot distribution center in the Upstate two years ago and operates more than 120 stores in South Carolina — don't have a choice where they get their goods.

Tariffs will affect about 10 percent of the products Dollar Tree sells, CEO Gary Philbin told the U.S. Trade Representative in August. The retailer, which sells items for $1 apiece, gets many of its products from China. Buying them anywhere else would force Dollar Tree to raise prices.

"We may be forced to discontinue offering thousands of impacted products," Philbin said, adding "the U.S. customer will suffer."

Nearly one-third of Dollar Tree shoppers have household incomes of $20,000 or less, Philbin said, calling them "the most vulnerable of all consumers to price increases."

In many cases, the strong dollar has played a role in retailers and others continuing to buy from China as it softens the blow from increased tariff costs.

"Retailers are continuing to import merchandise in order to meet consumer demand, even though tariffs are now in place on roughly half the goods imported from China and the trade war is still escalating," said Jonathan Gold, vice president of the National Retail Federation.

"Retailers are doing their best to mitigate the impact on their customers," he said, "but they are not able to quickly or easily change their sourcing.”

Carmakers hit hard

Volvo Cars, which has started building a redesigned S60 sedan at its new Berkeley County campus, might reconfigure one of its Chinese plants to make the same car for sale in that country, according to a report by website.

Volvo had planned to export locally made S60s through the Port of Charleston to China, but said that won't be feasible due to 40 percent tariffs China has imposed on U.S.-made vehicles.

"China will have to build up its own plant" to handle S60 production, Anders Gustafsson, Volvo's head of U.S. operations, told the website. "I need to find a substitute for the volumes" that would have gone to China, he said.

Meanwhile, a BMW executive said the China tariffs will cost its South Carolina plant about $347 million in lost earnings this year. Nicolas Peter, the automaker's chief financial officer, told Automobilwoche the losses could top $579 million annually if the tariffs stay in effect.

"Import tariffs on US products in China are critical for us because we export many X models (SUVs) from the U.S.," Peter told the German automotive website.

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Rows of South Carolina-made BMWs wait to be shipped overseas from the Port of Charleston. File

Global trade tensions are partly to blame for a drop in Upstate-made BMWs exported from the Port of Charleston. Such exports plunged 35 percent in August and hit a five-year low the previous month. The year-over-year drop in September narrowed to 2.1 percent.

“The continuing international trade conflicts are aggravating the market situation and feeding uncertainty,” BMW said in September as it cut its annual profit guidance to below 8 percent for the first time since 2009.

The Spartanburg County plant — BMW's largest in the world — posted a 6.2 percent decline in production in September, to 25,210 vehicles, compared to a year ago.

Newsome said he expects BMW exports will return to normal levels as the new X5 model starts shipping. The first of those SUVs were exported a couple of weeks ago.

Exports of Volvo vehicles at the Port of Charleston, scheduled to begin next year, also could take a hit due to the trade dispute.

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"Tariffs may affect our ability to import and export as planned, as well as to create jobs," said Volvo spokeswoman Stephanie Mangini.

Volvo expects to add production of the XC90 SUV at Berkeley County by 2021 and initially thought it would produce 150,000 vehicles per year, with half of them exported to foreign countries like China. However, the tariffs could cut production and a planned workforce of 4,000 people in half at the $1.1 billion plant off Interstate 26.

Losing patience

China's tariffs are in response to import taxes imposed by President Donald Trump on products made in that country. To date, the U.S. has imposed three rounds of tariffs on Chinese imports totaling $250 billion.

South Carolina is among the states hardest hit by the tariffs, according to a report by the U.S. Chamber of Commerce. About $4 billion worth of goods made in the Palmetto State are targeted for tariffs by China, including about $2.5 billion worth of passenger vehicles.

Manufacturing and global trade are among the biggest factors in the Charleston region's economic growth — fastest in the state, according to the federal Bureau of Economic Analysis. The three-county Charleston metro area grew its economy by 4.2 percent in 2017 to $36 billion. That's essentially the same size as Greenville's economy, which grew by 2.6 percent last year.

Exports make up 11.3 percent of the Charleston region's gross domestic product, 23rd nationally, and support nearly 25,000 area jobs, according to the Broookings Institution.

Tariffs also stand to impact smaller South Carolina towns.

Brookings' export database shows Georgetown ranks No. 45 nationally in terms of the share of exports — 15.5 percent — targeted for retaliation by China. That totals $36.2 million worth of goods supporting nearly 200 jobs in a coastal town where paper products and steel have been the biggest export commodities.

Tariffs "are taxes that make American producers less competitive and ultimately fall on consumers," analyst David Dollar said in a recent Brookings report. "They are bound to become unpopular over time."

That was evident during a senate committee hearing in September, when David Britt, chairman of Spartanburg County Council's economic development committee, said the trade policy threatens 10,000 workers at BMW's Greer plant and another 66,000 people employed by automotive suppliers statewide.

"I keep hearing, 'be patient, the president has a plan'," Britt told the committee. "Well, our trading partners and citizens are running out of patience."

Reach David Wren at 843-937-5550 or on Twitter at @David_Wren_