The next possible short-term disruption to logistics markets may be a global trade war. The American President, Donald Trump, is suggesting that he will attempt to impose tariffs on a number of products imported into the US as well as possibly seeking to undo some of the trade agreements that the US has made over the past few decades.
Although the statements are not entirely clear, Mr Trump and some of his closest advisors have already initiated an inquiry into the trade in steel, suggesting it is a possible threat to the security of the US. The implication is that the US will impose tariffs on steel imports, particularly those from China. Although this has attracted considerable excitement, tariffs in the global steel market are hardly unusual.
The White House is also considering further impediments to trade, with ongoing disagreements with Canada over lumber possibly being extended to arguments over aircraft assembled in Canada.
In the past few days Donald Trump has also criticised the trade agreement that the US concluded with South Korea, while a quarrel with Germany over the scale of its car exports rumbles on.
It appears that White House is divided. Many in the cabinet, such as Wilbur Ross, who is secretary of Commerce or Steven Mnuchin, secretary to the treasury, are muted in their statements around the issue, implying that they disagree with the direction of policy.
If world trade is disrupted through an increase in tariffs the implications could be serious for logistics providers but hardly catastrophic. Trade disputes are not new, with the US engaging in a round of tariffs on steel in 2002. The EU has frequently imposed tariffs on steel.
Specific trades could be hit. For example, if pressure was applied on Germany to reduce car exports that would hit the ever-buoyant car-carrier trade. But this business is increasingly diversified and no-longer dependent on the once dominant trade between Japan and the US. Much of air and sea freight is similar.
What would be affected is growth. Although world merchandise trade is still only growing by around 2.5%, it is recovering from a low of 1.3% in 2016. The WTO is uncertain, but thinks that growth may bounce back to 4% in 2018. Any trade war between the US and China or Germany could interfere with this. The knock-on effects in logistics markets would be rapid, with the recovery in air and sea freight likely to come to a quick end.
Source: Transport Intelligence, July 6, 2017
Author: Thomas Cullen
