Loadstar Leader: Tariffs and trade – if it ain't broke, why try to 'fix' it?

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At the same time as President Trump was claiming a deal had been struck with his Chinese counterparts after two days of tariff negotiations in London, over in Beijing, the Chinese foreign ministry hosted 53 African leaders.

The contrast in the results of these talks could not have been starker – the outcome of the London “deal” was that tariffs on Chinese exports to the US are settled at 55% and 10% the other way round, we think, because nothing has been signed off and, really, the only hard evidence is a social media post ALL WRITTEN IN UPPER CASE…

… while in Beijing, China offered to cancel all tariffs for African exports to China (apart from Eswatini, formerly Swaziland, the only Africa country to have officially recognised Taiwan), building on its decision last December to cancel all import tariffs from the world’s 43 least-developed nations.

The numbers already tell their own story, at least if we view them through the lens of container volumes: according to the latest Container Trade Statistics numbers, the sub-Saharan Africa-Far East trade grew 14.5% year on year in April, to 110,000 teu, with China accounting for around 61,000 teu of that.

In contrast, the sub-Saharan Africa-North America trade shrank 7.6% year on year in the same period, to 15,000 teu.

Meanwhile, figures from the UK’s Office of National Statistics show exports to the US tanked in April, and it is very difficult not to connect the “Liberation Day” announcements with the single-largest monthly decline in UK-to-US trade since records began in 1997.

There is undoubtedly a strong case for a country to rebuild its manufacturing sector, or to build resilience into its supply chains through investment in its shipbuilding, but the manner in which those policies are pursued is important.

Viewed from elsewhere, the US is in the enviable position of having an economy large enough – backed by a capital market unparalleled in size – that could happily accommodate widespread investment into its manufacturing sectors without having to lay waste the economies of its trading partners.

Few doubt the old adage that you should fix the roof when the sun shines – but there are good roof repairs and bad roof repairs – and some repairs on roofs that didn’t need a repair in the first place.