The rumbling “Trade War” between China and the United States was an open question as summer approached with new U.S. trade policy pronouncements — often contradictory — creating fresh challenges on an almost daily basis for those charged with supply chain and freight procurement and planning. The “Will They, Won’t They” negotiation narrative was certainly still alive and kicking in early June.
This left U.S. farmers in a strange kind of limbo. On balance, it seemed most likely that a range of tariffs would be imposed on China by the United States and this would result in threatened retaliation against U.S. farmers being realized. But as World Grain went to press, both sides still had opportunities to pull back from the brink.
The standoff meant the situation for shippers and shipowners was consistent only in its random volatility. Bulk shipping markets faced further uncertainty as the United States decided one trade war was not enough and raised the stakes in negotiations with its European Union, Canada and Mexican allies over steel and aluminum tariffs, using national security as justification for its actions. If a compromise is not reached, on June 20 the E.U. will reveal new tariffs on U.S. goods in response.
This second front in Trump’s War could have major implications for bulk markets and grain traders. The United States imported a total of 32 million tonnes of aluminum and steel products due to be tariffed via the sea in 2017, while the E.U., Canada and Mexico were responsible for exporting 8 million tonnes, equivalent to 160 Handymax loads, according to shipping association Bimco. Any change in these cargo flows will affect vessel availability — positively, negatively and perhaps both — later in the year.
When the prospective U.S.-China trade war is added to the mix, which, as previously reported in World Grain, could put U.S. exports of soybeans at risk, Sand said protectionism now threatened to ruin the best year for shipping since 2011.
“From a wider perspective, the effect of an escalating trade war may derail the current global upswing, which is at its highest point since 2011 and expected to continue,” he said. “This will have cascading effects on shipping demand as a whole. Free trade provides prosperity and is a fundamental principle to cherish and safeguard.”
Source: FarmingPortal
