President Donald Trump’s plan to curb the trade deficit by bolstering U.S. exports and reducing imports could create policy changes that impact the country’s industrial real estate markets, according to a report from Cushman & Wakefield that was released Monday.
The logistics and industrial research briefing determines that a trade war with China or the U.S. withdrawal from NAFTA remains unlikely. The importance of export partnerships with China, Mexico and Canada is what makes these two actions improbable, said Jason Tolliver, head of Industrial Research, Americas at Cushman & Wakefield.
“President Trump says he believes in ‘free trade but also fair trade,’ and as policy details emerge, companies will start looking at their supply chain networks to determine the impact on operating costs,” Tolliver said.
The U.S. has complicated trade obligations with 20 countries through 14 free trade agreements, according to Cushman & Wakefield. Free trade partners account for nearly 70 percent of U.S. exports and more than 80 percent of imports.
The report examines two executive orders Trump recently signed to make trade policy tougher on foreign governments. The policy targets those who subsidize companies which sell goods at below-market prices and calls for the Commerce Department to produce a report on every possibly trade deficient within 90 days.
China is the country’s second largest trading partner and its third largest export market. China is also a driver of the industrial-related warehouse demand and is a crucial trade partner for the U.S., the report stated.
All three NAFTA partners recognize the need to update the agreement, Tolliver noted. However, the report notes that U.S. trade with Canada and Mexico has increased more rapidly than with any other countries since the signing of NAFTA in 1995, and U.S. warehouse inventory has increased by a net of 3.5 billion square feet.
“China’s growing consumer class will exceed the entire U.S. population by 2026,” Tolliver said. “Similarly, when you consider the impact of increased cross-border trade flows between Canada, Mexico and the U.S. since NAFTA, it seems unlikely the U.S. would withdraw.”
The full report can be found on Cushman & Wakefield’s site.
