Global Rise in Trade Retaliation Hurting Export Promotion, Trade Experts Say
Companies across the world are increasingly struggling to expand their exports due to a rise in trade retaliation, trade experts said. Although exporters can find some stability by diversifying their markets, they should continue to expect unpredictability, particularly as countries react to changing U.S. tariffs. “You have to love riding roller coasters right now as a trade professional,” said Kim Campbell, president of MKMarin Trade Services, a Canadian trade consulting firm. “If you don't have that temperament, I think you're just going to be nothing but frustrated and heartbroken most of the time.”
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Campbell, speaking Aug. 19 during the American Association of Exporters and Importers virtual conference, said Canadian traders have increased efforts to diversify markets, partly due to their unpredictable trade relationship with the U.S. She said Canadian importers are particularly “upset” that they may face another round of tariffs on aluminum products from the U.S. (see 2008070050).
“We've been a little bit surprised” by U.S. trade decisions, Campbell said. She also said Canada is still waiting for clarity on a post-Brexit free trade deal with the United Kingdom, saying Canadian companies have “zero level of confidence” that an agreement will be in place at the start of 2021. “If Canada and the U.S. can't have predictability and honor each other's negotiations, I'm sorry -- I don't know what the rest of the world's going to do,” she said. “Because if these two countries can't get their act together, we can't have that certainty anywhere.”
John Bassindale, a trade lawyer with Millar Kreklewetz, said traders are seeing “a lot more in the way of … trade retaliation in general,” adding that it’s “really making export promotion a challenge for a lot of people.” Bassindale said he encourages U.S. exporters to seek customers in different regions to minimize the impacts of retaliation. “If you're only selling to one or two countries, then you're at the mercy of what those one or two countries like doing in terms of trade policy,” he said. “But if you sell to seven or eight countries, you hope that not all of them are going to be retaliating at the U.S. at the same time.”
The timing of retaliation can also be unpredictable, Campbell said, and can even be sparked from a statement by a government official that another country finds insulting. She said Canada’s stance on 5G infrastructure has heavily impacted trade with China, especially in the agricultural sector. China is increasingly rejecting imports of Canadian agricultural goods after claiming they don't meet new phytosanitary requirements, Campbell said. This has specifically impacted Canadian pork exporters. “They've had many, many challenges over the last year where their goods are literally showing up and not being allowed to come into China,” she said.
Canada has also increased trade enforcement against China. Campbell said the Canadian Security Intelligence Service is doing more industry outreach to explain the risks of trading with China and Russia. “From their perspective, everyone [trading with China and Russia] is in the crosshairs right now,” she said.
Although diversifying markets and forming close relationships with customers can help, exporters should still expect unpredictability, especially as the COVID-19 pandemic continues, Campbell said. “The world is so unpredictable now. I'm not sure that any decision you make is not going to change the week after you made that decision,” she said. “Clearly if you're going to tackle exports at this point, you have to have some level of risk tolerance.”