Trump says U.S.-China trade deal could be pushed off until after 2020 election

While the topic of tariffs and United States-China trade tension tends to generate some sort of response from supply chain stakeholders, the ones most heard tend to be common refrains along the lines of “ldquo;what now?,” “OK…,” or “we will have to wait and see,” among others.

But a new one can now be added to that list, with President Trump saying this week at the NATO meetings in London that there is a possibility a trade deal with China may be on hold until after next year’s Presidential election. That new refrain comes in the form of this: “really?”

That would appear to be the feedback of most supply chain stakeholders, too, especially when taking into account the toll tariffs have had on them, in the form of uncertainty, unpredictability, an inability to be able to provide accurate forecasts, and general unease, as it relates to what may be coming next.

It goes without saying that makes for difficult operating conditions, especially with supply chains’ myriad moving parts that are susceptible to more than a few things, like adverse weather, financial market actions, labor issues, and IT snags. Add continued trade issues, with no definitive end in sight, and it makes for more of the same, a difficult situation.

What’s more, President Trump’s indication that a U.S.-China trade deal could be pushed back a year follows what was referred to as a Phase One trade agreement that was announced in October, which a New York Times report said “would allow Chinese purchases of American agricultural goods to resume while the United States would cancel additional tariffs scheduled for Oct. 15.” Adding to that, the report noted that Trump might impose another round of tariffs on more than $100 billion worth of Chinese goods on December 15.

While tariffs continue to create supply chain issues, a late November research note from global trade intelligence firm Panjiva observed that tariffs are delivering on one of the White House’s key objectives­­-reducing imports from China-which dropped 16.2% annually in October, coupled with the total U.S. trade deficit dropping to its lowest single month going back to September 2017, with the caveat that total October U.S. trade activity slipped 5.6% annually.

A recent edition of the Port Tracker report from the National Retail Federation and maritime consultancy Hackett Associates called for “concrete evidence that a trade deal is coming to an end with a final deal that removes all tariffs,” but based on this most recent development, that seems unlikely, at this point.

And Hackett Associates Founder Ben Hackett spoke for many supply chain stakeholders, in the report, explaining that “industry planning is in a state of confusion with the on-again, off-again tariff increases and the widening of trade disputes.”

Tim Fiore, chairman of the Institute for Supply Management’s Manufacturing Business Survey Committee explained that there is unlikely to be any kind of business stability until the trade and tariff issues are resolved, whether that comes in the form of a new President after the 2020 election or a deal with China being reached prior to that.

The only certainty regarding trade, at this point, remains uncertainty. While consumers and businesses are busy as it is, this issue is not going away. So, until then, the working thesis of ongoing uncertainty remains, when it comes to trade and tariffs, remains.