A Look at Global Trade During 2020 and Moving Forward

Cargo ships entering one of the busiest ports in the world, Singapore.The year 2020 has been a bit of a wild ride. Well, that’s certainly an understatement. For many people in this country, the year has been filled with nightmarish rollercoaster-like ups and downs, twists and turns, and probably some machine malfunctions, ungreased gears, and loose screws. And yet, America—being the resilient and robust economy that it is— continues forward and marches on. So while every industry, every person, every sports team, business, and school is being, in some way, affected by changing regulations and people’s sudden hypersensitivity to personal space and hygiene, the global market is also seeing its effects. According to some reports, the global economy is seeing the sharpest reversal since the Great Depression. The drop was quite dramatic in the early months of the shutdown and has seen some steady recovery since. 

The Ever-Changing Markets 

If you are in the business of exporting or importing goods, you know that the market, regulations, and tides of trade are always shifting and ebbing and flowing. This year was specifically turbulent because of unprecedented circumstances. As of April 2020, 6.6 million Americans were seeking unemployment benefits. This has, of course, great implications for the domestic economy and will see the ripple effects moving through the whole of society pretty soon. The pandemic has certainly upended many international trade flows, though the U.S import and export movement must continue. It has certainly made countries think much more carefully about who they are trading with and how they conduct business abroad. 

China is, of course, coming under fire from many countries including the U.S and India. As of June of 2020, many Indian businesses were all boycotting Chinese products. India has already banned certain products, apps, and other items from China. In April, Japanese officials injected $2 billion to boost domestic manufacturing. Other countries, as reported by US News, like France have expressed their need to refocus their trading partners and reassess their relationship with people from China. White House economic advisor Peter Navarro told reporters that he thought, “We are dangerously over-dependent on a global supply chain.” 

These movements have led many to report that nationalism and more nationalistic trade policies will emerge the victors after the smoke clears. As Forbes reports, there have already been several reports to block exports of certain items. And this, according to them, might lead governments to be a lot more selective about what they deem essential exports and imports. 

Impact on Imports and Exports 

The pandemic has also had significant effects on imports and exports; it has disrupted supply chains, reduced trade volumes, and limited product availability. While this causes concern for traders, it doesn’t mean all of it is dismal news. Because all markets are interconnected — from Europe to India to the U.S — a disruption to one part of the chain will often have some effects on the other. 

Some analysts are predicting that returning to normal will be a difficult fight. Many believe that the outbreak has permanently altered the global flow of goods and services. The pre-coronavirus norms seemed to have open free-flowing trade across global markets, as globalization seemed to be the 21st century way of trading. The political popularity of globalization has suffered quite a bit and many countries are looking for ways to remain a little more conservative on their trade, or, at the very least, have much more discretion on who they trade with. 

And so while pre-corona trade patterns may not return, international trade, imports, and exports will continue to be a large part of the U.S economy as we continue trading with our allies and close trading partners. There is no question that the pandemic has brought about a change in the international markets, but exactly what kind of change is yet to be seen. Other industries like pharmaceuticals might see their changes as well, as countries begin to kickstart the production of some of these goods in their own borders. In the U.S, according to Market Watch, imports fell 6.2% but U.S exports fell even deeper with 9.6%. 

The U.S trade deficit also widened by almost 12% in March as international flights were not allowed to fly, which froze the global tourism. At the same time, the exchange of goods was also affected. The U.S exported fewer cars, aircraft parts, and barrels of petroleum. 

As far as the big picture is visible right now, some segments of international commerce are faring better than others. For example, trade in medical supplies and food, but the global petroleum market has been hard hit. The movement of electronic goods like iPhones has also decreased dramatically. And while the recovery of the global economy might take some time, there will not be a shortage of need for international trade, especially in certain industries. There has been some decline in freight and cargo shipments for a variety of reasons including the fact that many companies have had to shut their doors and many ports and transportation workers were either sick or unable to return to work. 

In these uncertain times, you need to have a brokerage you can trust. Here at Cordova Brokerage, we are entrenched in the movements of the markets and global trade in order to provide our clients with the latest information and pertinent changes. If you are importing or exporting goods, things might seem a little chaotic. Find a brokerage you can trust to walk you through the ever-changing markets, regulations, and compliance restrictions. 

 

An Overview of America’s Imports and Exports

two businessmen shaking hands with a shipping yard in the backgroundSince the beginning of the country, the trajectory and nature of imports and exports have changed dramatically in the United States. The U.S went from being quite protective and isolationist in its approach to favoring a more open and free-flowing market that led the way to modern foreign relations many today would term globalization. Each has accompanied the very different cultures and customs of the time. The change was, in large part, brought about by global conflicts that changed the way nations exchanged goods with one another. Post-war America began to see open trade as a way to open up countless possibilities to advance the country’s economic interests, as well as establishing strong ties with foreign nations. 

Some of the country’s founders had differing ideas about the ideal trade policy. Alexander Hamilton, for example, was far less of a protectionist that he is often made out to be. He knew the importance of the import market and how that could help fund the public debt. He had much milder tariff policies that found the support of traders and merchants of the time. Others, like Thomas Jefferson and James Madison,  considered much more draconian trade policies and seemed to purport a more domestically focused economy. Interestingly enough, when he became president, Jefferson imposed an unusual trade policy, which had a nearly complete embargo on international commerce from December 1807 to March 1809. This was a short-lived experiment that showed what it would look like to have an almost complete stop to international trade. This embargo, along with effects on trade from the War of 1812, is often said to have further sparked the rapid industrialization of the country and encouraged domestic manufacturing. 

The Early American Isolationism 

In the early days of American history, Americans seemed to have a ‘leave me alone,’ attitude. In large part, Americans still hold this attitude, as it is greatly inculcated in our nature and our country’s culture. Even after World War I, America slowly returned to a more isolationist foreign policy. The war, after all, had brought with it a very large unpaid debt, as well as a generation of men scarred by the war. And by the mid to late 20s, foreign policy was not something on most people’s minds.   The Hoover Administration set forth the Hawley-Smoot Tariff. Because trade was a large arbiter of foreign relations, the tariff was a way to cut off the discussion altogether. This caused a lot of foreign retaliation that contributed, at least in some part, to the economic downturn that gripped the U.S and the world in the late 1920s. 

At the London conference of 1933, Rosevelt refused to tie the American dollar to a gold standard. This upset many European leaders. At the same time, Roosevelt realized that the Hawley Smoot Tariff was crippling American economic growth and the U.S made the policy more flexible. 

Trade Policy After World War II

The breakout of World War II was of course another cataclysmic change to the world and the global markets. The United States, unlike Britain and other Ally countries, did not have their industrial centers and cities bombed and therefore did not suffer the kinds of losses to their manufacturing that other nations did. This opened the way for the United States to manufacture a lot of necessary parts and materials for the war effort and otherwise. The U.S dominated many export markets after the war because the manufacturing centers were intact, this allowed for innovation and technological advancements, and due to inherent strengths in numbers of workers and the growth of several industries. All of this set the United States up for success in a global market by the time the war was over and countries were trying to rebuild their cities and lives. U.S aid was important to this recovery and these nations also needed export markets in order to return to economic independence. The U.S helped create the General Agreement on Tariffs and Trade, which consisted of an international code of tariff and trade rules that was signed by 23 countries in 1947. 

In the 70s, the U.S trade balance was hurt due to some externalities like the oil price shocks, global recession, and increases in the foreign exchange value of the dollar. The American demand for foreign goods meant that America demanded a lot of imports. 

Still in the 1990s the nation remained committed to free trade and pursued to establish new multilateral trade negotiations, worked on new trade negotiations that involved Europe and Latin America and worked to solve other trade disputes. For a large number of people in the U.S, the idea of free trade means the liberal movement of goods across nations and the world. This opens up opportunities and markets and allows for better relations among nations. 

The nature of the current trade agreements and trade policies might be called into question after the world fully recovers from the 2020 coronavirus pandemic. This might return some manufacturing and production to the United States, or perhaps curb China imports some.  

The history of the United States trade policy shows how the country began and how it grew slowly as the world grew with it. Because of some of the global conflicts that gripped the 20th century, the U.S benefited and was able to build a great production machine with a lot of trade potential. 

Get With A Brokerage You Trust

Here at Cordova Brokerage, we are on top of all the changes and nuances of the U.S import and export business. It can get complicated following the many restrictions and compliance requirements. If you are looking to get into exporting goods or need brokerage services, we are here to help. Call us today. 

 

The Importance of the Trucking Industry

A white truck running on the street in the morning.

The trucking industry is a very important one, in fact, many would argue that it is the most important one in the United States. Everything you’ve ever owned has probably seen the inside of a semi-truck at some point. We’ve all seen them on the road and while we might sometimes get annoyed with them, we must remember that our society would crumble without them. These huge vehicles are responsible for your food, your medicine, your clothes, and just about everything else you have ever touched besides the soil on the ground outside. In fact, a giant truck might have transported that too, you can never tell these days. 

 

Employment

 

Next time you decide to honk at a truck driver for going just a little too slow, think about the person inside that truck. They are doing a job that is very difficult and very vital to our society. Truck drivers typically work very long hours, spending hours and sometimes days on the road. They are pulling massive loads and can’t even see behind them for the most part. Truck drivers also have to spend days and weeks away from their families, which can be really difficult for any person to do. Truck driving is definitely an important but rather thankless job. 

 

There are over 800,000 truck drivers working in the united states today and they account for $30 billion dollars each year. That is a lot of money being out into our economy that we can’t afford to lose. Without the trucking industry, we wouldn’t really be able to buy anything because there wouldn’t be anything to buy. The trucking industry supports consumers and business by transporting products all over the country to be purchased by everyone. Truck driving jobs are very hard, and not many people really want to do it, so we need to appreciate the people that do. 

 

Being in the trucking business can get lonely and there are many days where drivers are on the road for more than 14 hours a day. They spend several days all alone in their trucks. Driving a truck is most certainly a living, but it also probably will not make anyone rich. 

The Economy

 

Our economy is never an easy thing to talk about. It’s a lot of numbers that account for the lives of a lot of people, but right now we only need to discuss how the trucking industry affects the economy. Not to be dramatic, but we essentially would not have an economy. With a country as huge as the United States, we need trucks to travel all around it in order to make sure that everyone can get what they need. 

 

Trucks transport pretty much everything that we could ever need. Think about it. Most of our country is not surrounded by water, so we can’t use boats for everything, and flying everything to where they need to go is far too impractical and expensive. Truck driving is our only option. 

 

Our economy relies on consumers buying goods and services. Our economy does not work if consumers cannot find goods to buy. The trucking industry is pretty much responsible for everything that we buy. Even if your items didn’t get there in a semi-truck, it is likely that they were shipped as raw materials in a truck to a factory where they then got assembled into the item that you ended up buying. 

 

A Little History

 

Before our country had the trucking industry, we had trains and pack animals. In order to get all of our goods across the country, they would be shipped in trains and would be transported locally with wagons and pack animals. The transportation industry changed forever when the internal combustion engine was invented in the middle 19th century. A short time later, a man by the name of Alexander Winton invented the first-ever semi-truck in 1898 and sold the first manufactured one in 1899. By 1914, there were approximately 25,000 semi-trucks in the United States driving around and delivering goods across the country. As the country started building cultures around motor vehicles and started building suburbs and highways in the 1940s and 1950s, the trucking industry only had more reasons to get even bigger. 

 

If you are in the trucking and transporting business, Cordova Brokerage has your back. We can provide you with cross-docking and warehousing if you would ever need them. Get your goods and services to your customers in a way that is quick and efficient. Don’t hesitate to contact us if you have any questions, comments, and concerns. 

How to Get Your Start in U.S Customs Brokerage

An aspiring customs broker finds out that he passed the customs exam

For most of the U.S population, customs brokerage is not a major talking point. In fact, customs brokerage is an industry that drives a nation but works in the background, like how the electrical wiring in your home is hidden but essential. For the few that think about brokerage, it can be a complex, exciting, and fulfilling job that opens up new ideas and perspectives. If you’re one of those people that find brokerage fascinating, we’ll take you through what you need to break into the customs brokerage industry.

Basic Requirements

According to U.S Customs and Border Protection, you’ll need to meet three eligibility requirements before you can become a customs broker. The three requirements include:

  • Be a U.S citizen 21 years of age or over
  • Not be a current federal employee
  • Possess good moral character

So if you’re old enough for a Bud Light, don’t work for the government, and aren’t a member of the mafia, you’re probably eligible to be a broker. Some companies prefer a bachelor’s degree, but it’s not required. This just covers eligibility; actually becoming a customs broker involves a few more steps.

Becoming A Certified Customs Broker

If you’re eligible, then the next step is to pass the Customs Broker License Exam. Before you freak out about the test, it’s an open book exam, so you needn’t stress about memorizing everything you’ll need to know. As far as what the test will go over, you can expect to see these topics:

  • The Harmonized Tariff Schedule of the United States (HTSUS)
  • Title 19, Code of Federal Regulations
  • Specified Customs Directives
  • Customs and Trade Automated Interface Requirements document (CATAIR)

These are the basics for a customs broker, so make sure to internalize all of this information. The test is four and a half hours long, and there is a $390 fee that needs to be paid a month in advance. If you receive a 75 percent or higher on the exam, congrats! You can move on to the next step, which is getting your customs broker license. Get ready to shell out another $200 for that, and to wait a while for background checks. Credit reports, arrest records, character references will all need to be reviewed before you are cleared. In the meantime, learn as much as you can about being a customs broker.

If you have any questions about customs brokerage or want to join our team, Cordova Brokerage can help. Contact us today for more information!

The Current Trade Numbers and Why You Might Need a Freight Forwarder

If you’re in the trading business— or produce any kind of exportable good— you know that every day the United States takes in and ships out a good variety of goods to and from all over the globe. The international market is a busy network of people exchanging goods across borders and oceans. So if you are a producer or own a company that wants to ship goods or merchandise overseas, you are likely wondering whether a freight forwarder is an option for you. So how exactly do we help?

 

A freight forwarder actually has a lot of responsibilities and provides a variety of different services. We act mostly as an intermediary between the shipper and the transportation services. Yet, we are at the forefront of any shipping of merchandise outside of the country’s borders. Some of the typical functions we perform include preparation of documents for exporting or importing, warehousing, negotiating freight charges, freight consolidation, and relevant insurance claims. 

 

Current Trade Numbers and Information

 

In 2018, according to The Balance, the total U.S trade with foreign countries reached $5.6 trillion. Out of that total were $2.5 trillion in exports and $3.1 trillion in imports. That’s a lot of trade happening between the United States and the rest of the world. The U.S is the world’s third largest exporter. This means that the U.S is producing a lot of goods and sending them overseas, but sending goods across countries is not that simple. There are a lot of regulations and charges in place that must be taken into consideration. There are a lot of logistical questions as well —when it comes to shipping—that need to be factored in, particularly when you’re talking about large freight or a high quantity of goods. 

 

U.S exports are composed largely of capital goods, which include things like commercial aircraft, industrial machines, telecommunications, electrical apparatus, and medical equipment. Then there are industrial supplies, which include chemicals, petroleum products, and more. Finally, the other category of goods exported by the U.S are consumer goods, which can include smaller consumer products like cell phones, gem diamonds, and etc. 

 

Choose a Trusted Freight Forwarder

 

A lot of what we do depends on relationships that we’ve established with shippers over time and how we have established ourselves as a trustworthy and competent partner. You want your goods to be handled with care. Call Cordova Brokerage today for all your shipping needs.