If Covid-19 has done nothing else, it has hastened our trade relationship with China to where it should probably be. The last three blogs I wrote regarding China were focused on the trade issues with optimism yet expected volatility. I had hope that we might have achieved a better relationship with China through trade negotiations. That seems like a long time ago now.
It is telling, however, to see what has happened as it relates to the U.S.-China trade.
Kearney is an American global management consulting firm that focuses on strategic and operational CEO-agenda issues facing businesses, governments and institutions around the globe. In their latest report there is some pretty stunning data as to where U.S.-China trade was before Covid-19.
Since America engaged with China in trade negotiations, China was losing badly and we were winning. China went from being the Asian exporter that comprised 67% of what came into the U.S. in 2013, the year this index began, down to 56% by the last quarter of 2019. That means many U.S. companies chose to leave China as a place to do business, instead choosing other countries with a better business environment. Indeed, we were already leaving before Covid-19. I believe from what we discovered about America’s supply chain vulnerabilities we should keep on leaving. You can read the full Kearney report here.
On January 20th of this year the USMCA (United States-Mexico-Canada Agreement) was signed into law and thereby created a much better business environment for the three countries to recover in. Mexico had been losing business to China for years and now it is coming back significantly. The business flow between the U.S. and Canada has less obstacles with a higher possibility of increased prosperity for both countries. Click here to read the fact sheets and entire USMCA.
The impact of Covid-19 is obviously not completely known as of yet. We are hopefully not far from starting to reemploy America. Some industries may not return to their former prosperity for some time if at all. The effects of the virus may permanently change the way many of us live going forward. Businesses had to be creative and efficient without their normal tools. No getting on an airplane and making business happen elsewhere.
How many businesses will adopt the changes they had to make? How could that affect hotels, travel, transportation, and energy? The graph below shows where the body blow of Covid-19 impact on industries likely landed.
We will soon begin our recovery. We will get life moving again. We will prosper again, with new friends and new ideas. We should look to help one another. Local businesses and businesses all across this great country will need our help. America is a beautiful place and we should travel it near and far if possible. The stock market will rebound and move on to new highs as it has always. The money managers that we use for our client’s assets have wasted no time and are resetting portfolios to their best ability with a focus on attempting to maximize opportunities. We are where we are, it is now time to move forward.
If you’d like to make an appointment to go over your options or answer questions, we’re happy to help.
The views and opinions expressed herein are those of the author(s) noted and may or may not represent the views of the Lincoln Investment Companies.