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Mar 21, 2019 7:00:00 AM

Trade in the Context of Economic Expansion (Part 2)

From a trade perspective, we can see that today, US import activity is strong and relative to China should stay strong. Why? Well, have you ever heard the joke…

Two men are walking through a forest. Suddenly, they see a Mountain Lion in the distance, running towards them. They turn to run away. Suddenly one stops to put on running shoes from his bag. “What are you doing?” says the other man. “Do you think you will run faster than the Mountain Lion with those?” “I don’t have to run faster than the Mountain Lion,” he says. “I just have to run faster than you.”

I mention this parable because I see that the US and China are both running away from an “Economic Mountain Lion!” The difference is that I see that US is the faster runner. For this reason, the US may have the upper hand in the long-term trade dispute. This means that we are likely to continue trading, buying and importing because, as pointed out by JP Morgan Chase CEO Jamie Dimon in a recent CNN Business interview, the underlying foundation of the US economy is much stronger than China’s. He points to “the country's "enormous corruption," 400 million people in poverty, weaker legal safeguards and complex regional challenges” as the main obstacles.

Does this mean that we will be immune from issues in the shipping industry? No! A strong dollar means that jobs and economic growth in the long term could dampen. With the rest of the world economy declining, it seems logical that the US economy will eventually follow suit. Yet as I mentioned before, these trends take time to manifest in the economy. This will in turn take time to manifest in our industry. So with a caution mindset, a reasonable perspective is to pursue growth, while planning for a future that is characterized by variability.

Topics: bunker fuel prices, trade war, tariffs, imports and exports, tariff impacts on prices, US and China Tariffs, global trade

Author: Mario Bruendel

The Xport Guide to Next-Generation International Shipping

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The XPort blog brings you next-generation ideas to build a lasting source of competitive advantage for your company.  Dedicated to unraveling the many secrets of the International Shipping Industry, this blog will help readers:

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