The international shipping community can heave a sigh of relief as the United States and China bury the hatchet and pledge to stop the trade war.
A Chinese trade delegation, headed by Chinese Vice Premier Liu He, managed to score a deal in Washington with the U.S. Government representatives by promising to reduce the United States trade deficit with China.
“To meet the growing consumption needs of the Chinese people and the need for high-quality economic development, China will significantly increase purchases of United States goods and services. This will help support growth and employment in the United States,” the White House said in a statement.
“Both sides agreed on meaningful increases in the United States agriculture and energy exports. The United States will send a team to China to work out the details.”
The delegations also agreed to step up their trade in manufactured goods and services. Furthermore, China committed to amending its laws on intellectual property protection, including the Patent Law, which was one of the major concerns voiced earlier by the U.S.
The trade talks will hold off the announced imposition of tariffs by the Trump Administration on China worth up to USD 150 billion, as well as China’s retaliation measures.
This is a very important milestone taking into account that trade between China and the USA accounts for roughly 4 percent of global trade, which means that a dispute between the two would damage considerably the global trade patterns.
The consensus is expected to curb the further erosion of the drybulk market’s recovery, since the sector has already started to feel an aftertaste of the trade war, especially after China’s extension of tariffs on imports from the US to several more agricultural products including soybeans.
The tariffs posed a threat for U.S. ports as well, as they would reduce steel and aluminum imports and exports, putting dockworkers and countless others in the supply chain out of work.
With regard to the container shipping market, the industry’s volumes on the essential leg of a transpacific voyage from China into the US would have been impacted considerably if the trade war continued brewing.
Specifically, China’s lower level of US containerized imports would have prompted freight rates and earnings to go down as well.
World Maritime News Staff; Image Courtesy: Donald Trump, Twitter