Global Trade Recovery

The Bureau of Economic Policy Analysis, based in the Netherlands, recently reported that their index of global trade rose 3.5% in July. Although trade is 16% below the level of spring 2008, the 3 month average has shown an increase of .5%, it’s first rise in a year. The July ending 3 month average of industrial production increased by 3.2% but production was still 1.9% down in the U.S. Japan and Asia are leaking the pack in the production rebound.

Annual trade volume, though, was down more than 11% and far below the growth rate of 2006. A month ago, the U.S. imposed trade tariffs of 35% on tires from China. Last week, the European Union slapped tariffs of 40% on steel pipe from China. Contending with high unemployment during a global recession, governments come under pressure from their domestic industries and unions to preserve market share and jobs. During the depression of the 1930s, the U.S. unilaterally imposed a number of high tariffs, which led to retaliatory tariffs from other countries. The stifling of trade during that decade had a drastic impact on the economies of many nations. Hopefully, leaders in the G-20 nations will have learned from the lessons of the 1930s.

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