Panjiva says trade fundamentals are strong, despite concerns over tariffs

Data recently issued by global trade intelligence firm Panjiva pointed to a very strong month for United States-bound waterborne shipment activity in February.

February shipments, at  949,198, rose 13% annually, marking the fastest rate of growth going back to February 2016, topping January’s 7.7% annual increase, which was the best annual growth rate going back to April 2017 at that point. Through the first two months of 2017, total U.S.-bound waterborne shipments are up 10.3% compared to the same period a year ago at 1,958,188.

One factor for February’s strong showing, said Panjiva, is the later-than-usual timing of the Lunar New Year, which will likely result in a “correction” in the form of fewer shipments in March.

Another factor to monitor, according to Panjiva, is actions the Trump administration are considering through a broad range of tariffs, which are part of the White House’s section 301 review of its intellectual property policies.

“One of the centerpieces of the Trump administration’s economic policy is that America is losing an economic war with China and a big part of that is America’s trade deficit with China,” said Panjiva Research Director Chris Rogers in an interview. “At the same time there are concerns about technology transfer and the fact that China seems to be playing by its own set of rules, which led to [White House’s] creation of a section 301 review of its IP policies of China and what that allows Trump to do is say if are there any findings that China is breaking the rules that the U.S. can put tariffs on any Chinese goods it wants to.”

The timing of the Lunar New Year partially paced a 23.7% import increase from China, including Hong Kong, which outpaced all other markets, save for Vietnam at 30.1%. Taiwan snapped a nine-month stretch of declining shipments with a 1.9% gain, while imports out of Singapore dropped 12.7%.

Panjiva said that productions with high production levels in China saw gains in February, with furnishings up 24.7% and toys up 27.6%, with the firm suggesting those levels may reflect a “potential pre-emption of tariffs,” with a likely similar effect for iron and steel shipments, which saw a 19% gain for its fastest rate of expansion going back to May 2015.

Putting aside protectionist leanings, Panjiva’s Rogers explained that trade fundamentals are actually pretty good.

“Business confidence is the highest in a decade, due to tax cuts and when people are confident they spend both overseas and domestically,” he said. There is no reason that will change in the short-term. Whether it is Wall Street or Main Street, until higher tariffs actually hit you in the pocket as a business or consumer you are not going to change your shopping or purchasing behavior.”

For things to trend in the other direction, Rogers said it would clearly require large protectionist measures.

“Consumer and business confidence factors are what has been driving trade so far, and that is why there has been optimism,” he said. “Trade fundamentals feel great going into spring, but the concerns over tariffs looms.”