Headlines this week have been dominated by the war in the Middle East, as US-Israeli strikes on Iran have escalated into a wider conflict. Global Trade Today has covered the impact on shipping and trade in energy products.
Elsewhere, the UK’s Spring Statement, US government reluctance to refund tariffs and China’s latest five-year plan all factored in this week’s trade news.
The big picture: The war in the Middle East has expanded throughout the week, with major implications for shipping and energy prices.
The Strait of Hormuz is effectively shut, following Iran’s threat to “set ablaze” any ships passing through the stretch of ocean. An estimated 200 tankers are stranded in the region as major shipping firms abandon the waterway. You can read more about that in this week’s regular State of Freight feature.
The strait is over 100 miles long but just 21 miles across at its widest point, with 20% of global oil consumption and up to a third of world liquefied natural gas supply typically passing through two shipping lanes.
Manufacturing nations reliant on the Middle East for supplies of fossil fuels are already feeling the strain.
Taiwan – the production centre for the world’s most advanced semiconductor chips – announced a mutual assistance framework with Japan and South Korea to prevent gas shortages. The FT reports that the island nation imports 90% of fossil fuels from the Middle East, while South Korea imports 70% of its crude oil from the region. Both are attempting to diversify their supplies.
Adding to global supply woes, the report goes on to note that China, which possesses the world’s largest crude oil stockpile and is a leading exporter of refined oil, has directed its refineries to stop exporting.
Responding to the crisis, the US has eased sanctions on Russian oil exports to India. Treasury secretary Scott Bessent described the move as a “deliberate short-term measure” to ease oil supply challenges amid the crisis.
On X, Bessent claimed that the easement “will not provide significant financial benefit to the Russian government as it only authorizes transactions involving oil already stranded at sea”.
Last year, the US placed one of its highest tariff rates on India, in response to its continued purchases of Russian oil. US tariffs on India fell from 50% to 18% after the two nations cut a deal last month. Trump touted an increase in Indian purchases of US oil as a key outcome of the deal.
Good week/bad week: An absence of bad comment, rather than a surfeit of good, greeted UK chancellor Rachel Reeves’ Spring Statement this week.
Against the backdrop of the escalating crisis in the Middle East, Reeves nonetheless said she would continue to pursue stability as a foundation for growth, and would focus on implementing the government’s existing plans to generate it.
While praising Reeves’ decision to dial-back the significance of the set-piece speech and save major policy updates for the autumn, commentators noted that her message – and the figures underpinning it – had already been overtaken by the financial ramifications of the war.
Rising energy prices and the potential harm to borrowing costs would likely challenge Labour’s fiscal policy promises, but the full impact would only emerge later this year.
Chartered Institute of Export & International Trade director general Marco Forgione praised the statement for highlighting “the vital importance of breaking down trade barriers” to strengthening the economy, but called on more to be done “to support businesses in exporting to diversify UK supply chains and build resilience”.
A bad week for firms anticipating US tariff refunds, as the Trump administration seeks to delay repayment.
Politico reports that US businesses are preparing for drawn-out legal fights to reclaim duties that the Supreme Court ruled illegal last week. Currently, over 2,0000 refund cases are pending at the US Court of International Trade.
Trade experts have suggested that there could be a deliberate attempt to stymie the repayment process by the White House by refusing to set out a clear refund system for US importers, and instead allowing the individual suits to be delayed at the Court of International Trade.
How’s stat? 4.5-5%. That’s the new Chinese growth target released this week at part of the Chinese Communist Party’s 15th five-year plan.
The figure is the lowest set since 1991, a reflection of economic challenges domestically, including high youth unemployment and an ongoing property crisis, and increasing assaults on its export-led growth model from trading partners frustrated by ever-escalating trade imbalances with Beijing.
The new plan, which contains chapters on addressing problems at home, like boosting consumption and upping innovation, will likely be approved in a formal vote, held next week.
Quote of the week: “We inherited the highest energy costs in Europe, four times that the wholesale price of the US. Until we change the structural nature of our energy markets, which I don’t think anybody in this room thinks we can do in 18 months of government, then we only solve the challenge by subsidising.”
Business and trade secretary Peter Kyle, speaking at MakeUK’s annual manufacturing conference on Tuesday (3 March).
The week in customs: Missed sanitary and phytosanitary checks on meat and plant products imported into the UK has raised the risk of a biosecurity incident, according to the Environment, Food and Rural Affairs committee.
A number of products that should be subject to checks entered the UK from the Port of Dover without them, increasing the chances of diseases entering the country undetected.
What else we covered: With the annual TechUK conference held this week, Global Trade Today reviewed the latest news in trade and technology, including remarks from the conference, Indian progress towards its digital trade documents act and World Customs Organization edicts on tech from its own conference.
Technology was also at the forefront of the Chartered Institute’s latest Export Controls Special Interest Group, with dual-use classification of AI products and algorithms among the topics discussed. The write-up, including insight from sanctions expert Andy Bridges, is here.
Members can enjoy a wide-ranging exploration of the implications of ‘de minimis’ changes in the US, EU and UK, covered in this month’s Lunchtime Learning webinar.
True facts: Half of all adults in the UK don’t read regularly, that’s according to the Reading Agency’s 2024 report on the topic.
To inspire you to rekindle your reading spark, this World Book Day (5 March), the Chartered Institute team shared their trade book recommendations, with a selection of history, economic and fiction.
