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Timme Spakman, Economist at ING, notes that the international trade was down 1.2% percent in March so that Q1 was just 0.4% up from December 2017.

Key Quotes

“Even before the recent protectionist measures kicked in, international trade declined for the second month in a row. The White House’s trade policy will cast a shadow on further trade growth for months to come.”

“The current figure does not yet reflect the current tensions and recently taken protectionist measures such as the steel and aluminium tariffs imposed by the US at the end of March. Although countries have been exempted from the US tariffs on steel and aluminium, the price that countries like South Korea pay for this puts a break on trade growth as well.”

“Last weekend’s handshake between the US and China looks like a sign of de-escalation. However, the risk on trade restricting measures remains. Although the US suspended the current tariffs, the Trump administration remains focused on narrowing the US trade deficit. Since no trade policy can achieve a significant reduction in the US trade deficit and the deficit looks likely to increase, tensions are bound to build-up again.”

“On the other front of the trade war, a deadline is closing in.”

“Although the economic impact of the Steel and Aluminium tariffs by the US and the EU’s retaliatory tariffs will be mild, it increases the likelihood of an expanding trade war between the EU and the US which would hurt trade growth significantly.”

“The President’s focus on the US trade deficit, and his limited ‘successes’ in bilateral negotiations make it unlikely that he will soften on trade. This casts a shadow over further trade growth this year.”