Asia Trade to Grow 7%, Despite Tariffs

Chinese trade is expected to grow nearly 7% this year. According to Mario O. Moreno, senior economist at Drewry who spoke at the Port of Long Beach annual Pulse of the Port conference this week, despite recent tariffs on Chinese steel and aluminum and fear of a trade war between the US and China, Asia-to-US trade will grow an estimated 6.8% this year. The increase is driven by economic factors, namely the expectation for more robust economic growth.

“We are forecasting growth of 6.8% for 2018,” Moreno said in his presentation at the conference. “This growth forecast is based on economic fundamentals. We believe the US economy will improve farther in 2018. According to Oxford Economics, the US GDP should grow by 2.8%. This is better than the 2.3% growth the we saw last year. On the surface this forecast looks high, but if you look at the growth rate for the last three years, it has only been between 3% and 3.5% for this route.”

Moreno’s estimate for the Asia-to-US trade route was similar last year, however, trade from Asia rose only 3.5% in 2017. “Although US imports from Asia grew, as expected, the performance was disappointing,” he said, attributing much of the underperformance to only moderate economic growth of 2.3%. Home sales were the economic sector that Moreno found particularly disappointing, with existing home sales up only 1.7%. “This is an economic indicator that I follow very closely because it has a very strong influence over containerized imports of furniture and home goods,” he said. Auto sale also performed below expectations, which Moreno says “had an adverse impact of containerized imports of auto parts.”