The most important changes that will affect the international trade and transportation industry in 2011 are the U.S. national debt and U.S. trade policy toward China. Both of these issues will be driven by fear.
The election of Republicans to the majority of the U.S. House and significant seats in the U.S. Senate means the American public is fearful of additional government spending. Markets also will leave policymakers little room to maneuver because of the sheer size of the U.S. debt and the declining value of the dollar.
As a result, all government actions will be debated through the prism of deficit reduction. Expect battles over the “scoring” of all legislation and the Congressional Budget Office’s estimate of the budget impact of each bill. Heightened scrutiny of even the most routine trade bills will mean slow going for the trade community.
Additionally, the U.S. trade imbalance with China is symbolic of bigger economic issues: pegging another country's currency to the U.S. dollar; state intervention in currency markets; international reaction to U.S. policies designed in the interest of the U.S. economy rather than the global economy; large economies pursuing their narrow national self-interest.
U.S. efforts to increase exports as a way to expand its economy, reduce its trade deficit and preserve its manufacturing base will run into these powerful forces as the global economy has operated for the past 20 years with the U.S. consuming the exports of other countries. The deleveraging of U.S. debt will create more tensions between the United States and China.
As a result, it will be difficult for President Obama to conclude free trade agreements unless they promise real export opportunities for U.S. companies. That does not bode well for a trading regime used to the U.S. making concessions.