It’s a difficult reality to escape. Everything has become focused on it. No matter where you turn the coronavirus has likely had an impact. It’s changed people’s perspective on any number of things from health, to the economy, to how they look at their local officials. There is a lot of talk about what is ‘essential’ and ‘non-essential.’ This, of course, can get complicated, as people’s livelihoods are on the line and questions about the government’s authority on deciding who is essential or not, come to the forefront. Needless to say, there is a lot on people’s minds, both consumers, business owners, and otherwise. For businesses that depend on moving their product across international markets, particularly into Chinese markets, the landscape has also certainly changed. As customs brokers, we are considered essential services and have thus been allowed to continue our operations. Our mission, of course, is always to provide the necessary services for businesses that are importing or exporting goods through the international markets.
There are a number of ways in which the slow down of trade has impacted what we do here. As we continue to move forward and help our clients move their product where it needs to go, we find ourselves having to think outside the box. Ocean freight really became the best option, as airlines began to close, but travel restrictions have also impacted the ability to transport goods to the ports. All of this has proved difficult but we continue to serve our clients.
It’s no secret that the United States and China have a lot of trade that happens between the two. The impact of the virus, then, has meant that businesses have had to recalibrate just how they conduct business overseas. According to Bloomberg News in March China’s exports had fallen more than expected in the first two months, as the coronavirus struck the country early on in the year. The drop in exports was about 17.2% and imports declined by 4%.
As we learn more about the origin of the pandemic, how it spread, how it could have been announced earlier by the Chinese government, there is a shift happening in the way people think about some of our trading partners. There are some indications that show that after the pandemic our trade relationship with China will be quite different and that thoughts on globalization will be somewhat impacted. It’s still too early to see what that might mean in terms of numbers of imports and exports, but it might indicate a coming sea change in the way the international markets operate.
In China, most things have started to reopen and slightly returned to normal. As of the writing of this text, some states in the country have begun to slowly reopen as well. All this begins to unclog everything and allow for businesses to operate with some level of normalcy. Nevertheless, the picture of the international markets continues to be very different than what it was just six months ago. According to Market Watch, the U.S trade deficit widened by almost 12% in March as most international flights were grounded, the tourism industry froze, and the virus caused major interruptions to the exchange of goods like cars and iPhones.
Imports fell 6.2% while U.S exports tumbled an even deeper 9.6% to cause the trade gap to rise. This is quite the fall and very concerning for people in the industry. The United States exports in February hit 207.7$ billion and fell to 187.7 billion in March.
The pandemic has undoubtedly made a dent in international trade flows and supply chains of certain products. This has impacted many industries and emerging markets that depend upon imports and exports. Of course, China is not our only market, as the U.S also does a considerable amount of trading with Europe and other parts of the world.
Certainly, there is talk about the re-shuffling of global supply chains as the pandemic comes to its peak and decline. Countries have learned about some of their vulnerabilities when it comes to their trading partners and limiting their trading partners. Since the last outbreak that came out of China in 2003, the country has gotten a bigger grip of the world’s GDP, going from 4% to about 20%. The U.S and China trade war that already underway did not exactly help the situation.
Nevertheless, we continue helping businesses keep their supply chains open and active as best as possible during these uncertain times. There is a lot of diversifying of the supply chains in order to distribute exports. Many experts are projecting that the markets will change and that there will be a new way of doing things when it comes to trading with certain countries.
What those changes will be exactly is hard to tell just yet. What is clear is that business owners in the United States are ready to continue sending out their products to available markets.
The industry is not black and white. It is always changing and subject to many worldwide events. This pandemic has, of course, been unprecedented and is likely to have a major impact in the way that we trade with countries like China. Despite these catastrophic circumstances, RM Customhouse is here to help you get through all your import and exports.