The U.S. export outlook remains a difficult story to tell

Given the uneven terrain 2020 has been on since the onset of the COVID-19 pandemic in mid-March, it goes without saying that this has been as odd of a year as it could possibly be. That statement, by no means, is meant in jest, given the toll the pandemic has placed first on family members of the more than 300,000 Americans that have lost their lives, as well as the many businesses that have been forced to cease operations or significantly change the ways in which they conduct business.

Throw in the election, the civil unrest, and the many other global issues and challenges afloat, and it really is a tenuous outlook, to be sure.

While we have all been consumed in the pandemic in one way or another, when looking at our sector, one needs to remember that there are a whole host of issues and topics on the logistics and supply chain front that existed prior to the pandemic and will certainly remain intact on the way out after the pandemic. Those things are along the lines of the future of transportation infrastructure, e-commerce logistics, an incoming President, and many others.

One thing that has been as evident as just about anything else is the lack of real movement relating to U.S. exports.

That is made clear by data for the month of October, the most recent month for which data is available, issued earlier this month by the U.S. Department of Commerce, which stated that with a 1.7% increase, the U.S. trade deficit, which occurs when a country imports more than it exports, grew to $63.1 billion.

That number was derived from U.S. exports seeing a 2.2% increase to $182 billion and imports up 2.1% to $245.1 billion. And on a year-to-date basis through October, the U.S. trade deficit is up 9.5% annually, to $536.7 billion.

These numbers are not encouraging, and while the COVID-19 pandemic certainly has impacted these numbers, the ongoing theme of a longstanding trade deficit has been in effect well before these still-dark days of the pandemic, as well as President Trump’s tariff strategy approach, which has not resulted in the anticipated lessening of the trade deficit either.

Port of Los Angeles Executive Director Gene Seroka explained on a media call this week that at his port, which along with the Port of Long Beach accounts for roughly 40% of total U.S. containerized shipments volume, exports have been down in 22 of the last 25 months through November. And he explained that this has been the case, due largely to continued and ongoing trade tensions with China and also the strength of the U.S. dollar, too, which makes U.S. goods expensive to sell in overseas markets.

A major issue for 2021, from the POLA’s perspective, he explained, is how to respond to the American exporter, whom has been largely left out of the equation as it relates to demand trends, as well as what the incoming Biden administration will bring on the policy front and renewing relationships with longtime U.S. allies on the global trade front to make sure the U.S. had a broader-based approach to international trade and also the competitiveness of the American worker and company.

“I don’t know if the trade imbalance gets equalized [in the Biden administration],” said Seroka. “Earlier in the year, I saw what was happening in the trade landscape and called for a National Export Strategy, which will be at the head of our policy list when we begin to speak with the new administration in earnest, and we have already been speaking to the transition teams across the board. The other piece is that while we have never been balanced on container trade, for the better part of a generation, the opportunity to bring some of the people back to work that have been out of jobs because of COVID-19…in some of our most important industries like agriculture, manufacturing, and automotive [among others].”

What’s more, a 2019 study conducted for the Port of Los Angeles showed that tariffs threaten nearly 1.5 million U.S. jobs and more than $186 billion of economic activity nationwide. The study entitled “By the Numbers: Jeopardizing the National Benefits of Trade through America’s Busiest Port Complex,” noted that the use of tariffs have done little to quell the ongoing global trade challenges the U.S. is up against.

And it added that U.S.-imposed tariffs have triggered retaliatory tariffs. The vast majority of U.S. tariffs target trade with China, the world’s second largest economy and America’s largest source of imported products. China accounts for 54% of imports and 29% of U.S. exports moving through the San Pedro Bay ports, based on value.

Port officials said the effect is a threefold disadvantage for U.S. businesses and workers:

• Import tariffs increase costs for U.S. consumers and producers;
• Tariffs make foreign products cheaper to manufacture, putting U.S. manufacturers at a cost disadvantage; and
• Retaliatory tariffs reduce the demand for U.S. exports, putting U.S. companies and jobs at risk as foreign consumer markets look elsewhere for goods and products

These data and factors continue the ongoing narrative of what is a really difficult story to tell, given the ostensibly interminable U.S export outlook. What is happening now is not working well, to be sure, and changes will be needed, whether it is a fine-tuning of the approach to, or dramatically reducing, tariffs, increasing and exporting our global trade base, and other things. While we don’t have a truly clear idea just yet, it stands to reason we will in due time.