SAINT SIMONS ISLAND, GEORGIA (February 6, 2017) – Recent executive orders, proclamations – and even tweets – by US president Donald Trump have led to uncertainty about the future of world trade. Trump ran on, and has begun implementing, an “America First” policy, and has promised to bring factory and mining jobs back to the United States, casting uncertainty on the country’s role in future trade deals.

Shortly after his inauguration, Trump scuttled US participation in the Trans-Pacific Partnership. He has also promised to renegotiate the 25-year-old North American Free Trade Agreement (NAFTA).

But Walter Kemmsies, an economist and managing director at real estate services provider JLL, said at a press briefing at the Georgia Foreign Trade Conference that there’s not, as of yet, any clear indication as to how trade deals with the US will be affected.

“There are several things being brought in to the same discussion,” Kemmsies said. “There are plans to implement a corporate tax cut that would help American producers, mostly the manufacturers and the exporters. There is a review of NAFTA as well as other trade agreements and, to quote the president, he wants to make it an N-A-double F-T-A. Is it a fair free trade agreement?”

Kemmsies says NAFTA was struck in 1992 and that it is fair to review whether the agreement in its current form still makes sense. “That doesn’t mean it’s going to be rejected or that it will result in border adjustment taxes. Equally on the table are other options such as increasing the local content of imports. For every one dollar on average imported from Mexico, 40 cents of that was originally American export into Mexico. If the goal really is to target employment and growth, then targeting local content might be the preferred approach.”

Griff Lynch, executive director of the Georgia Ports Authority, speaking at the same press briefing, said that renegotiating trade deals could be a good move for the United States. “I’ve been with the Georgia Ports Authority for six years,” he said. “When I arrived, one of the major exports we had was Georgia poultry, and [now] we’re about 50% of what we were. It has nothing to do with any taxes coming in, it’s restrictions that are placed by other countries on our products. The Georgia ports and other ports in the US have been negatively impacted by duties placed on our goods. That’s something that we need to be cognizant of. There are some unfair trade practices happening."

Trump’s promises to bring manufacturing jobs back to the United States has been met with scepticism by his critics, who say that while some jobs have been lost to offshoring, more have been lost to automation. Kemmsies signalled his agreement with those critics.

“Manufacturing can come back to the US, but it’s unlikely to achieve the goals the president has stated,” he said. “Every time we bring manufacturing back to the US, the employment impact is substantially less.”

Kemmsies said that a plastic toy maker that moved its factory to China in the early 2000s later returned after plastic prices in the US plummeted. “The head count is 25% of what it was before it shut down and moved to China,” he said. “We are automating production. We are automating distribution activities. We are even trying to automate transportation, so I think trying to reclaim factories that, if they come back, still need to keep the labour costs down, isn’t going to achieve the economic goal.”

Much of the commentary about world trade declining is related to the dollar value of the trade, Kemmsies said. “Most of the weight of what’s traded are bulk commodities, and if oil prices drop from over US$100 to US$30 a barrel, and iron ore drops from US$140 a ton to US$40 a ton, and corn drops from US$12 a bushel to US$3 a bushel, and that’s across the commodity spectrum, the value of trade measured in dollars would naturally decline. But that has nothing to do with volume, and what we care about here is volume.”

See more on the Georgia Foreign Trade Conference in the February issue of Asia Cargo News.