- January 28, 2020
Top Countries Affected by Trump Era Policies
Written By: Written by Russel Beron Jan, 27th 2019
The past couple of years have been characterized by a shakeup in global trading relationships, led by the Trump administration in the US and Boris Johnson in the UK. The result is a messy mix of trade deals and lots of uncertainty. We can expect more of the same in 2020 as the Brexit story evolves and Trump moves beyond China to tackle trading relationships with the European Union, the UK and other countries and regional interests such as Vietnam, Japan, India, Brazil, Africa and others. So far though, US policies have led to a drop in trade with most of the world, except with ASEAN.
Vietnam benefited hugely in 2019 by picking up trade flow because of the US/China trade war. Many manufacturers beyond apparel, footwear and furniture have set up there including high tech companies such as Apple, Siemens, Alphabet (Google), Samsung and Intel. Their GDP has grown at an average of 7% for over decade and while wages are still cheaper than China, things are changing quickly. While so far Vietnam has slipped under Trump’s radar, White House trade advisor, Peter Navarro has indicated that Vietnam will be a target for trade talks in 2020 which could put a dent in Vietnam’s ongoing growth.
Japan is another significant economy to watch. While the US recently signed off on a trade agreement covering agriculture and digital trade with Japan, it by no means matches the potential of the TPP which Trump pulled out of. By all accounts, Japan and the US will have to work on a phase 2 deal soon. Japan also recently signed a trade deal with the EU which takes effect January 1 and is still going ahead with the Regional Comprehensive Economic Partnership which enables free trade with Pacific rim countries.
While the US and India are close to finalizing a trade deal, the rising US trade deficit with India is most likely to result in more tariffs on India. The US has already removed India from the Generalized System of Preferences program and is expected to push harder on India. India also recently pulled out of the Regional Comprehensive Economic Partnership deal over concerns that China will have free access to the Indian market. Japan was pushing for India to be part of the deal and India’s withdrawal was a strategic loss.
Brazil and the US have both expressed interest in negotiating a free trade agreement, however it might be complicated by the fact that Brazil is part of the Mercosur trade bloc with Argentina and Paraguay. In early December, Trump threatened out of the blue to reimpose steel and aluminum tariffs on Brazilian and Argentinian imports, despite a supposed good relationship with his right leaning Brazilian counterpart. Most likely the US will reach trade agreements with both Brazil and Argentina, who face challenging economic conditions with growing inflation and unemployment at home.
The US and the EU have had a long running trade dispute over the EU’s support for Airbus whereby the US won the right to impose 100 percent duties on $7.5 billion of EU goods. Most likely the US will impose further duties on EU imports. This would result in retaliatory tariffs by the EU on US imports. Some clarity on the US/EU trading relationship should happen when the EU trade commissioner, Phil Hogan and his US counterpart, Robert Lighthizer meet for discussions in mid-January.
Several years ago, the US expressed interest in negotiating a trade agreement with Kenya and Ethiopia that could be replicated across African countries but not much has developed. In the meantime, the US has removed trade benefits for South Africa under the Generalized System of Preferences program and the African Growth and Opportunity Act. These discussions are expected to continue through 2020. In the meantime China has grown into Africa’s largest trading partner for 10 consecutive years.
All these issues and more are covered in the most recent Q1 2020 Retail Sourcing Report. To learn more about how to address some of these concerns with the CBX platform, feel free to contact us directly.