The Year of Trade: Reflecting on What We Are Thankful for in 2018

​It is that time of the year when the TradeMoves team reflects on what we are thankful for in terms of cross-border trade opportunities for US exporters, and prospects for the next year. 2018 has been a busy year for international trade, and not without much uncertainty. From the NAFTA renegotiation, to several US trade actions against foreign imports and subsequent countermeasures imposed by trading partners, to threats of a potential withdrawal from the WTO, companies have faced growing uncertainties due to trade policy decisions in the United States. For small businesses, these changes can be an enormous burden to their operations requiring more time dedicated to their supply chains and overseas customers. 
           
Below are a number of areas we have identified as positive outcomes in a difficult year.  

1. After more than a year of negotiations, the United States has successfully secured a renegotiated NAFTA 2.0 deal with Canada and Mexico -- known as the US-Mexico-Canada Agreement (USMCA) – which supports US SMEs in several ways. The US gain a bit more access to the Canadian dairy market, US manufacturers will have access to more refined sugar from Canada, the agreement includes an SME chapter —a first for a US agreement, new provisions will promote SME trade and investment through SME dialogues, trade facilitation enhancements and customs modernization efforts such as single window, and more IPR protections are a few of the new elements of this agreement.[1]. The agreement is likely to be signed at the end of November, and implementation of USMCA could come as early as mid-2019, but likely in 2020.
2. On the fringes of the NAFTA 2.0/USMCA is the outstanding issue of Section 232 tariffs on steel and aluminum imported from Mexico and Canada, and their retaliatory tariffs on certain US goods.  While the tariffs and counter-tariffs are still in place, we believe the conclusion of the USMCA and its imminent signing will result in a negotiated settlement with Canada and Mexico, and the lifting of their retaliatory duties in the near future.  We are hopeful that this will be resolved by year’s end and minimize the impact on US manufacturers that rely on steel/aluminum inputs and those that are targeted with retaliatory tariffs.
3. While some countries have targeted US goods in response to US Section 232 actions on steel and aluminum, good news is that US businesses have avoided retaliatory tariffs on US agricultural exports to South Korea. A successful upgrade on the US – Korea Free Trade Agreement (KORUS) on 24 September 2018 prevented an additional 25% tariffs on US steel imports from South Korea, benefiting most in the auto sector. In the meantime, the US continues to remain as the top supplier for food and farm products in South Korea. South Korea is the 6th largest trading partners of the US[2], accounting for $48.3 billion of total exports and nearly $7 billion of agricultural exports[3] in 2017.
4. Despite the trade-adverse disturbances, the global economy and US economy are both doing well.  The International Monetary Fund (IMF) projected a healthy global economic growth rate at 3.7% and US GDP growth rate at 2.9% in 2019[4], stronger than many developed countries, except for Australia’s 3.2%[5]. This also means that global consumption and trade activities are on the rise despite some push back from protectionist measures. Comparing January to September of 2017 to the same period of time during 2018, a positive growth of 9.23% on total trade was observed in the United States, reaching $3,127.7 billion dollars thus far in 2018[6].
5. The US has indicated it would like to pursue new bilateral agreements including with Japan, the EU, and the UK (post-Brexit).  As the US is moving to expand bilateral trade relationships and resolve trade disputes with major economies in the world, we are hopeful that following the strong economy, more good news in international trade is on the horizon.
6. In such a complicated cross-border trade environment, we are grateful to work with wonderful clients of all sizes that continue to keep their fingers on the pulse of international trade and strive to be flexible in managing change.  We have appreciated the opportunity to provide timely assistance, expertise, and support for our clients through the many trade tensions and changes in trade policies this year.
7. Finally, we are thankful for our hard-working colleagues and experts, great companies and trade associations, and passionate trade gurus, all making efforts to increase US exports and support US jobs.

 
Happy Thanksgiving to all!
 
Chinyen Cheng
[email protected]
240.389.9003

[1] United States - Mexico - Canada Agreement Fact Sheet: Supporting America's Small and Medium-Sized Businesses, USTR Press Release, 2018.
[2] Top Trading Partners, Trade in Goods, US Census Bureau, 2017.
[3] U.S. Agricultural Export Opportunities in South Korea, USDA Foreign Agricultural Services Report, October 2018.
[4] 2018 Article IV Consultation Report: the United States, IMF, July 2018.
[5] A Strong U.S. Economy Will Boost Global Growth in 2019, Bloomberg, November 2018.
[6] Year-to-date total trade – September 2018, US Census Bureau, 2018