Trade war, skirmish, or stalemate?

The trade deficit with China is trending favorably. A comparison of the first six months of 2019 with the comparable period in 2018 shows the trade deficit with China edging down. That’s a reduction of about 10%, according to Census Bureau statistics.

Welcome news, perhaps, but hardly a breakthrough. 

If the logistics network in Southeast Asia were to realign, a surge in trade with Bangladesh or Vietnam would be expected. The trade deficit with Bangladesh is up by about a third, by about one hundred million dollars a month. The trade deficit with Vietnam is also up by a third, about a billion dollars a month.

Logistics professionals are flexing, evolving away from China, but that is not the same as reshoring to domestic U.S., or even North American, sources. Port volume at Los Angeles–Long Beach is up 3.9%, higher than the growth rate of the U.S. economy. The growth in the GDP (Gross Domestic Product) for the 2nd quarter 2019 was 2.1 percent, and the 1st quarter clocked in at 3.1 percent. 

This data demonstrates that the global logistics networks are evolving, perhaps balkanizing, but that is not the same as reshoring. How the tensions with China will resolve is unknowable. What is clear is that logisticians need to pay attention. 

Supply Chain Risk Management matters.  Educate your boss.