The future of U.S.-China relations continued to be a focus this week. The potential for new restrictions on U.S. technology exports to Hong Kong are one potential flashpoint. Another is China's delivery of its phase 1 trade deal commitments. The latest evidence for China's purchases under the phase 1 trade deal showed a pickup in the 548 products covered versus a year earlier, but China is still $27 billion behind schedule for the year so far.

 

It's not just China where the U.S. faces potential trade adversaries. The USTR launched an investigation of digital services taxes in the EU and U.K. which could hit the automotive industry, the topic of our Report of the Week. 

 

Elsewhere in trade policy the Trump administration launched the third national security review in as many months, this time covering vanadium. Regular trade investigations continued too with a new investigation of tire tariffs. 

 

Outside the U.S., negotiations between the EU and U.K. to form a long-term trade deal have continued to struggle, leading logistics firms to make alternative arrangements for shipping from Ireland. 

 

The hangover from COVID-19 is set to continue with the container shipping firms planning continued capacity restrictions through August. Container shipping rates suggest such discipline is still needed while the fallout from Pacific International's woes can be seen in increased shipping by Evergreen and Maersk.

 

U.S. trade slumped on the back of COVID-19 disruptions - the potential boost to trade with Mexico and China from the start of USMCA on July 1 is more necessary than ever. U.S. business sentiment towards trade improved but is still deeply negative.

 

Companies as diverse as Build-a-Bear, Costco and Cummins face ongoing supply chain disruptions from COVID-19 with the retailers also facing tough choices ahead of the peak shipping season. There's also been continued shifts in crude and refined oil supply chains due to lower demand.

 

The automotive industry faces the dual challenges of recovering from COVID-19 and the advent of USMCA's new regulations , shown in comments from ZF and BRP. Nissan is taking a longer-term view but is nonetheless cutting capacity.

 

In terms of medical supplies there was a clear uptick in U.S. imports in April, with the exception of testing kits and shipments of pharmaceuticalsfrom India.