Trade Updates and Projections in Light of COVID-19
On April 18, President Trump signed an Executive Order that will allow certain U.S. importers that have faced a significant financial hardship during the COVID-19 response to defer the payment of certain duties, taxes, and fees for 90 days. According to the World Trade Organization’s (WTO) April 8 forecast, world trade is expected to fall by between 13% and 32% in 2020 in the aftermath of worldwide disruptions caused by COVID-19. The WTO expects exports from North America and Asia to be the hardest hit, along with sectors with complex value chains – particularly electronics and automotive products – due to the share of foreign value-added in those products. However, these sectors are also likely to see the quickest rebound as pent-up demand is released in line with a recovery in sentiment, according to Baker McKenzie. Services trade may be the component of world trade most directly affected by COVID-19 through the imposition of transport and travel restrictions, closure of many retail and hospitality establishments, and inability to rely on inventories. However, some services such as IT may benefit from the crisis due to increased working from home and remote socializing. The WTO expects trade to recover at least partially in 2021, with optimistic projections positing that trade will recover close to its pre-pandemic trend and pessimistic projections predicting a prolonged, incomplete recovery.