As summer begins to fade, back to school shopping ramps up and the feared second wave of COVID-19 lingers like an unwanted house guest, the world of international trade is contributing to the very thing businesses, investors and trader loathe: uncertainty. Here are three watch items fueling the unpredictability.
Biden versus Trump
With Donald Trump now officially nominated as the Republican candidate for president, he is warning that electing Joe Biden would be disastrous for the ‘Make America Great Again’ agenda. Saying he would be the “destroyer of American greatness” Trump is doubling down on an a trade protectionist agenda that is targeted squarely at his base and at the working class voter in the Rust Belt that propelled him to victory four years ago.
Biden is hoping those same voters have grown tired of the Trump approach and will instead trust him to restore jobs and prosperity. While the approach is different, the objective is the same: bring back American manufacturing jobs that have moved offshore.
Regardless of who wins in November, a ‘re-shoring’ agenda to bring jobs back to American soil will remain the official trade policy for the foreseeable future, and neither candidate will be touting the virtues of ‘free trade’ as a stand-alone principle.
Leadership in the European Union
While some would argue the EU has been playing defence about its relevance since Brexit, there’s no question it has had a rough go in recent years as it attempts to negotiate trade agreements around the world while its member states put up protectionist walls.
Yet another blow this week was the abrupt resignation of EU Commissioner for Trade Phil Hogan for disobeying pandemic-related travel restrictions. The EU has some serious work to do to get its reputation back as a credible institution that can advance trade and economic policies with its partners around the world. Even Canada is annoyed with the EU. These issues will continue to persist in the post-pandemic period. EU credibility is on the line.
What’s next in Asia?
As China’s ascendency in the global economy sputters as a result of the pandemic, the ongoing trade war with the U.S. and other geopolitical issues, the push into Asia for global businesses is being re-evaluated. Expect this to be short lived.
Beyond China, export opportunities throughout Asia for a variety of sectors are huge. Southeast Asian countries remain attractive export targets and the Trans-Pacific Partnership has opened up these markets like never before. And as the largest prize in the pact, Japan, the world’s third largest economy is a no-brainer for exporters.
News today that Japan Prime Minister Shinzo Abe is resigning due to health reasons is unfortunate. However, ‘Abe-nomics’ is here to stay and Japan’s global leadership isn’t going anywhere. For global trade, Asia remains the future.