Trump Administration Restricts Entry Into U.S. From China

January 31, 2020

The travel disruption sent shocks through the stock market and rattled industries that depend on the flow of goods and people between the world’s two largest economies.

 

Moving to counter the spreading coronavirus outbreak, the Trump administration said Friday that it would bar entry by most foreign nationals who had recently visited China and put some American travelers under a quarantine as it declared a rare public health emergency.

 

The temporary restrictions followed announcements by American Airlines, Delta Air Lines and United Airlines that they would suspend air service between the United States and China for several months.

The travel disruption sent shocks through the stock market and rattled industries that depend on the flow of goods and people between the world’s two largest economies. Planning was upended for companies across a vast global supply chain, from Apple to John Deere, the tractor company.

 

The S&P 500 suffered its worst loss since October, falling 1.8 percent, as the spread of the virus — and the increasingly urgent efforts by companies and governments to contain it — fanned fears of an economic slowdown.

 

The government travel restrictions, which will take effect on Sunday evening, were announced by Alex Azar, the secretary of health and human services, who declared that the coronavirus posed “a public health emergency in the United States.”

 

The administration’s action will restrict all foreign nationals who have been to China in the past 14 days from entering the United States. The restriction does not include immediate family members of American citizens and permanent residents. Nearly three million Chinese residents traveled to the United States in 2018, according to federal data based on travel records.

 

The travel restrictions and the airline’s announcements showed how rapidly concerns about the virus have escalated into a grave test of the global economy, for which there is no recent precedent. Three weeks after the first virus-related death was reported, China has found itself increasingly cut off from its biggest trading partner, the United States, and many other nations.

 

Chinese officials said on Saturday that there had been an additional 46 deaths in the country, the most so far in a 24-hour period, raising the death toll to 259. It said confirmed infections had grown to nearly 12,000, from 1,300 a week earlier.

 

About 100 cases have been confirmed across 21 other countries, including seven reported cases in the United States. Russia, Italy and Britain each reported their first infections on Friday, two from each country. The four patients in Italy and Russia were Chinese citizens, the authorities there said; Britain did not release any details.

 

To address the outbreak, China has extended the Lunar New Year holiday, which was to have ended Thursday, into next week. In cities across the country, including those far from the center of the outbreak, there were eerie scenes Friday of all-but-empty streets and highways, closed shops, trains without passengers and nearly deserted public spaces that are normally packed.

 

The slowdown in activity has raised fears that essential supplies, including food, will run short, which the government insists it will not allow to happen.

 

And it is unclear when China’s economic engine — a huge producer of both consumer goods and industrial components — might return to anything resembling normal.

 

Many companies said they were relatively well positioned for the disruption, thanks in part to the recent easing of the trade tensions between China and the United States. Faced with the threat of tariffs, many companies — particularly retailers — had stocked up on imports from China, or found suppliers in other parts of Asia.

 

But if the restrictions in China are kept in place for many months and the virus keeps spreading, profits will suffer.

 

Forsake, a footwear company based in Boston, has most of its supply chain and production facility in Zhongshan in southeastern China. The company received its spring orders before the annual holiday closing and is stocked through July. After that, said Sam Barstow, the president and chief operating officer, who knows?

 

“We don’t really know what we’re planning for,” Mr. Barstow said.

Tim Cook, Apple’s chief executive, said on an earnings call this week that many of its suppliers’ factories in China would remain closed until Feb. 10.

 

Apple had closed one retail store in China, and said traffic into its stores across China had decreased in recent days. Apple is frequently “deep cleaning” its stores and regularly checking the temperature of its employees there, Mr. Cook said.

 

The airlines are also braced for prolonged turmoil. American said all of its flights between the United States and mainland China were being suspended immediately, through March 27.

United and Delta said their flights on those routes would be suspended by next Thursday. United said it expected to resume operations on March 28, while Delta said its suspension would last through April 30. The three airlines accounted for more than a third of all travel between China and the United States in 2018.

 

In 2018, more than 8.5 million passengers traveled between the United States and China, according to data from the United States Transportation Department. Most flew on a handful of Chinese airlines, none of which immediately responded to requests for comment Friday on any plans to halt or modify service.

 

The coronavirus has already sickened more people than the outbreak of the SARS virus did in the eight-month outbreak of 2002 and 2003.

 

The SARS outbreak coincided with a relatively brief slowdown of global growth in early 2003, which was followed by a sharp rebound.

 

SARS, however, is an imperfect comparison because at the time China represented just 5 percent of the global economy. In 2019, China accounted for about 18 percent, according to JPMorgan Chase economists.

 

“The much larger role of China in the global economy versus 2003 implies much greater global spillover risks,” the bank wrote in a research note on Friday.

 

On Wednesday, the JPMorgan Chase economists cut their forecast for Chinese economic growth sharply for the first quarter to incorporate the impact of the virus. They now expect that the Chinese economy will grow at an annualized rate of 4.9 percent in the first quarter, down from the 6.3 percent pace they previously predicted.

 

The new forecasts reflect the expectation of sharp decelerations in retail sales, industrial production and business investment. But the forecast also calls for a strong rebound in economic activity in the second quarter, as the impact of the outbreak dissipates.

 

Concerns about global growth have pushed the benchmark American oil price below $52 a barrel, from more than $60 at the start of the year, and have sent the shares of energy companies lower. Tech stocks have also suffered, with particular weakness in the semiconductor sector, which is closely linked to supply chains based in and around China.

 

On Thursday, the State Department raised its travel advisory to Level 4 — “Do not travel” — a rating reserved for situations in which the government expects to have very limited ability to help citizens abroad. The World Health Organization declared a global health emergency because of the spreading virus, though it opposed restrictions on travel or trade with China.

 

Mr. Azar, the United States health secretary, and other members of a Trump administration task force emphasized on Friday that the current risk to the American public from the coronavirus was low.

But the drastic travel restriction suggested that the risks in the United States could grow quickly and unpredictably.

 

Dr. Anthony S. Fauci, the director of the National Institute of Allergy and Infectious Diseases, said at a Washington briefing that the actions were being taken because there were “a lot of unknowns” surrounding the virus and its transmission path. Unlike influenza, which is fairly predictable in terms of infection and mortality, Dr. Fauci said there was not the same certainty about the rate and path of the coronavirus transmission.

 

“The number of cases have steeply inclined with every day,” Dr. Fauci said.

In addition to the restrictions on foreign nationals traveling from China, the United States will begin funneling all flights from China to just a few airports, including Kennedy International in New York, O’Hare in Chicago and San Francisco International.

 

Officials said any American citizen returning to the United States from the Hubei Province in China, where the outbreak is centered, would be subject to up to 14 days of mandatory quarantine. Any American returning to the country who has visited the rest of mainland China within the last 14 days will undergo proactive health screening at selective ports of entry.

 

The government also imposed a two-week quarantine on 195 people who were evacuated on Wednesday from Wuhan, China, to a California military base.

 

Some public health and policy experts said the restrictions announced Friday, weeks after the virus was discovered in China, might not do as much officials hoped in containing the contagion.

 

At this point, sharply curtailing air travel to and from China is more of an emotional or political reaction, said Dr. Michael T. Osterholm, an epidemiologist and director of the Center for Infectious Disease Research and Policy at the University of Minnesota.

 

“The cow’s already out of the barn,” he said, ”and we’re now talking about shutting the barn door.”

 

Reporting was contributed by Matt Phillips, Patricia Cohen, Niraj Chokshi, Jack Nicas, Knvul Sheikh, Russell Goldman, Chris Buckley, Elaine Yu, Richard C. Paddock, Richard Perez-Peña, Elisabetta Povoledo and Jason Horowitz.

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