Restarting

The engine in one of my cars turns off when at a complete stop until the brake is released.  The idea is to not burn fuel idling at lights or in traffic.  Recently, I noticed that it was no longer doing that but never took the time to figure out why.  Then, on Saturday (on my way to perform magic at my niece’s 7th birthday party; the show was free, and the kids got what they paid for), I figured out why.  The battery wasn’t strong enough to keep turning the engine over each time, so the feature automatically stopped working.  It wasn’t until the battery was completely dead that this dawned on me.  Starting an engine takes a sizeable surge, requiring an ample reservoir of power.

Global trade might also take a lot of power to restart or at least restore if it slows too much or stops altogether, although the latter is highly unlikely.  Right now, trade is experiencing a negative exogenous shock which could prove difficult to remedy quickly.  Tariffs are hastily slowing the pace of global commerce.

Prior to now, the most recent negative shock started over five years ago with a global pandemic.  The shock caused a demand surge here in America which was met with disruptions at ports around the globe.  Labor shortages reduced logistical productivity both at the port and inland.  Stories of idle container ships waiting for space crowded news headlines as firms anxiously waited for their wares, hoping to receive them before orders were canceled or the contents spoiled.

Now there are growing concerns about another round of shortages.  The Economist printed this article suggesting ports will have plenty of capacity; they just won’t have many containers.  Last month was tumultuous as economies, leaders, and markets grappled with a world in which trade is much less free than before.  The article cites indicators which are closer to real-time than, say, the Balance of Trade report from the Bureau of Economic Analysis, which is released with considerable lag each month.

Port data thus far hasn’t revealed reasons for concern, but a leading measure could be showing signs of a storm on the horizon.  Compared to a year ago, the amount of goods arriving at the ports of Los Angeles and Long Beach is similar in number.  However, bookings for new trips from China to America were down 45 percent on April 14th (after Liberation Day) compared to a year earlier.  The Wall St Journal reported in this article a steep decline in official exports from China for the month of April, hitting the lowest level since 2022 (in the midst of the prior exogenous shock).  Prices for shipping containers are down as well, reflecting the downward shift in demand.

This may ultimately all go away with the stroke of a pen.  Global trade is in uncharted territory for the modern economy.  If and when this is resolved, it is unknowable how quickly the engine of global trade will begin firing on all cylinders again or how much time is needed for it to warm back up to operating temperatures.