“Trade Truce” with China proved to be a remarkable prediction

With this week’s release of A.T. Kearney’s Global Business Policy Council (GBPC) predictions for the coming year, one particular forecast is especially prescient, the trade war “truce” with China.

“U.S.–China relations worsened significantly in 2018 as U.S. President Donald Trump took a hardline approach to reducing the bilateral trade deficit with China,” observe analysts. 

They also note that over “vocal opposition” from the business community, the Trump administration imposed tariffs on $250 billion of Chinese imports after negotiations failed.

Negotiations were in a standstill until a few days ago, when Presidents Trump and Xi agreed to resume talks for the next three months. But analysts remain skeptical about the outcome.

“For the moment, U.S. multi-nationals are stuck in a kind of ‘purgatory,’” says Courtney Rickert McCaffrey, manager of thought leadership for the GBPC.  “Their positions might have been far worse without the truce, but we don’t feel it’s going to get much better.”

Indeed, she feels that Insufficient progress on key issues will likely lead President Trump to raise tariff levels on Chinese imports, with the administration possibly even imposing tariffs on an additional $267 billion of Chinese goods—encompassing essentially the entire value of Chinese imports in 2017. 

“And while Democrats will have a majority in the U.S. House of Representatives, the bipartisan disapproval of China’s trade practices will sustain President Trump’s trade agenda,” says McCaffrey. “China’s retaliation will likely include increased tariffs on some U.S. imports and efforts to offset potential losses for domestic companies. Beijing will also look to secure alliances, dispel growing opposition to its trade practices, and fortify its domestic economy.”

China will therefore focus on diversifying its trade and reducing its dependence on the U.S., including pressing ahead with free trade agreements. 

GBPC’s 10 major predictions, fleshed out in the study, are based on continuous scanning of the horizon across dimensions of demography, economy, environment, geopolitics, governance, resources, and technology. In 2018, many of GBPC’s predictions unfolded more or less as described. 

This year’s study examines several key issues:

• The rise of exoskeletons in the production processes
• Cryptocurrencies
• The global waste management crisis
• The global shipping industry
• Emerging markets’ economies
• Africa
• Medical advances
• Shifts in global leadership

The most unexpected prediction is that a sand shortage will “grind the gears” of the global construction industry. 

“Urbanization and infrastructure development are resulting in a global shortage of sand, the second most extracted natural resource after water,” states the report.  Two-thirds of construction material is concrete, which itself is composed of two-thirds sand.