Global Trade Recovery Could Be Weakened By Multiple Disputes


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Submitted by Christophe Barraud

According to CPB Netherlands Bureau for Economic Policy Analysis, world trade experienced an “unmatched” decrease in April as significant economies struggled with stringent lockdowns due to coronavirus. The volume of global sell products dropped by 12.1% MOMMY in April (the largest regular monthly contraction considering that records began in 2000). On a three-month moving average, the index was also down 7.2% in April (largest decline because March 2009) and need to contract much more in May.

Ongekende daling van # wereldhandel in april.


De #wereldhandelsmonitor van het Centraal Planbureau @CPBnl laat in april een historische daling van de wereldhandel zien van -12,1% 10 opzichte van maart.


Voor meer informatie: https://t.co/5TMd4SC9bB of https://t.co/4n2Rd6XqOg pic.twitter.com/6xAVjE1O12

— Centraal Planbureau (@CPBnl) June 25, 2020

#Trade falls steeply in very first half of 2020 – WTO


Link: https://t.co/S6HtY2rlqT pic.twitter.com/gCAyn4cLBn

— Christophe Barraud (@C_Barraud) June 24, 2020

In the information, the latest WTO report highlighted that “ In light of readily available trade information for the 2nd quarter, the April forecast’s downhearted situation, which presumed even greater health and economic costs than what had transpired, appears less most likely

#WTOForecast update: World trade fell greatly in the first half of 2020 due to #COVID19 however fast federal government reactions assisted temper the decline. The trade slump is not likely to track the worst case scenario in the WTO’s projection from April. Complete report: https://t.co/lMvgS1eE5B pic.twitter.com/Gjd9ESnCqM

— WTO (@wto) June 23, 2020

As a matter of truth, most current high frequency information recommend that the worst seems behind us (if there is no second coronavirus wave later this year) with the Baltic Dry Index recuperating given that late May/early June. Taking a look at the 20- day moving average, the index might even turn favorable on a YoY basis in early July.

The ongoing normalization (reopening) in China, Eurozone, a number of U.S. states and Asian nations imply that both private financial investment and household expenditures will mechanically rebound from 3Q20 so that international trade growth will leave nearly 2 years of economic downturn.

Nevertheless, leaving out a number of dangers such as a second coronavirus wave, numerous trade disputes could slow the recovery. Of all, the long-lasting clash in between U.S. and China. Despite positive comments from U.S. authorities, the most recent figures revealed that, even if China boosts substantially its purchases of U.S. goods, it will be far from meetings U.S. requires specified in the “phase one” contract.

Today’s data indicate China’s purchases of US items stay well under 50% of prorated, year-to-date targets of Trump’s Stage One deal https://t.co/L2Be1ozw68

— Chad P. Bown (@ChadBown) June 4, 2020

As a result, U.S. authorities might be lured to increase pressure on Beijing quickly in order to support 3Q U.S. GDP just ahead of the governmental election (November 3). Yet, Chinese officials would most likely disagree creating more tensions between the two countries. In the short-term, investors will have to focus on the lobster industry. According to press reports, White Home trade adviser Peter Navarro stated Donald Trump is directing U.S. Trade Representative Robert Lighthizer to report by July 15 on whether China is starting to comply with $150 million in lobster purchase commitments under the “stage one” contract. If not, Trump informed Lighthizer to think about positioning retaliatory tariffs on the Chinese seafood market

Navarro stated Trump is directing #USTR Lighthizer to report by July 15 on whether #China is starting to adhere to $150 million in lobster purchase commitments – NYT


If not, Trump told Lighthizer to think about placing vindictive tariffs. https://t.co/zqdv4Ia0yQ pic.twitter.com/bPJdjQoAQ3

— Christophe Barraud (@C_Barraud) June 25, 2020

According to Bloomberg, “ Transatlantic relations might reach a brand-new low next month as the European Union prepares tariffs on billions of dollars of American exports intended at politically crucial markets for President Donald Trump and his Republican allies in Congress.

#Europe Targets U.S. Coal, Farms in Election-Year Trade Staredown – Bloomberg


Europe might enforce tariffs versus the U.S. as quickly as July


States like Missouri, Louisiana could be impacted by tariffs https://t.co/G9KDw5tygr

— Christophe Barraud (@C_Barraud) June 25, 2020

More just recently, Bloomberg likewise reported that “ The European Union moved better to advising that travelers from the U.S. shouldn’t be allowed to get in the bloc even after July 1.” In this context, “ European diplomats are braced for President Donald Trump to take unkindly to Americans being kept away, while the Chinese are allowed in.

U.S.-EU Discord Imperils Rebound in Prime Trans-Atlantic Flights- Bloomberg


Link: https://t.co/7ZqBgQfsCY pic.twitter.com/1IEO9FBtMU

— Christophe Barraud (@C_Barraud) June 27, 2020

Individually, another conflict has actually emerged in Asia. In the information, “The state-run Bureau of Indian Standards is completing harder standards for at least 370 products to guarantee items that can be locally produced aren’t imported, the people stated, asking not to be recognized citing rules.

#India Strategies to Enforce Stringent Guidelines and Tariffs on Chinese Imports – Bloomberg https://t.co/etEzzuwAR7

— Christophe Barraud (@C_Barraud) June 25, 2020

Other conflicts are not excluded with the U.S. also considering re-imposing tariffs on aluminum imports from Canada. For That Reason, in the short term, it appears that threats look skewed towards a slower international trade recovery than expected.

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