VINACHEM

July saw a recovery in global consumer demand and exports that helped keep factories humming — a period that could probably be viewed as the calm before the chaos of tariff hikes in August.

Bloomberg’s Trade Tracker showed yet another strong reading this month, with only two out of 10 key measures of global commerce in “below normal” territory. Asia’s export powerhouses such as Singapore, South Korea and Taiwan have led the charge, banking on increased clamor for chips and electronics. That’s kept major ports busy despite elevated freight costs and continued disruptions around the Red Sea.

World trade has seen a steady run of gains this year, gradually shaking off the impact of high inflation and borrowing costs, as well as the drag of a sluggish Eurozone economy. However, the resurgence could be short-lived as more and more economies get embroiled in a trade war and tariffs become a hot-button issue in the upcoming US election.

In fact, some of the current trade uptick is already being driven by the frenzy to import goods before higher US tariffs kick in on Aug. 1 for China-made electric vehicles, batteries, solar panels and medical products. The tariff hike is estimated to affect some $18 billion in annual imports.

The European Union has also imposed provisional tariffs on EVs imported from China, while Beijing has warned it could hit back at the bloc’s agricultural goods, aviation and large-engine cars. Even Mexico hasn’t escaped the US’ scrutiny, with new tariffs slapped on steel and aluminum that wasn’t melted and poured in that country — a move designed to prevent China from evading higher levies.

The headwinds for global commerce are likely to ratchet up further. Donald Trump has already floated the idea of a 60% levy for Chinese-made goods and a 10% across-the-board rate for other countries if he returns to the White House. The increasingly complicated web of tariffs and threats have already forced automakers like Tesla Inc. and Volvo Car AB to rethink production.

“US-China economic ties were significantly reduced during Trump’s first term in the White House. If he wins a second term, his plans could rupture those ties entirely,” said Bloomberg Economics’ Eleonora Mavroeidi and Maeva Cousin. A 60% tariff on Chinese imports alone “would shrink a $575 billion trade pipeline to practically nothing.”

We’ve selected measures across shipping, sentiment and export volumes to watch. For the clearest indication, we measured how far each gauge is from historic norms. These data update in real time from the Bloomberg Terminal as they’re reported.   – Bloomberg –