President Trump’s intentions to curb America’s trade deficits by beefing up US exports and curbing imports drive could drive policy changes that trickle down to industrial markets around the nation, according to a new Cushman & Wakefield report.
“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,” says Jason Tolliver, head of Industrial Research, Americas at CushWake. “The importance of China, Mexico and Canada as export partners makes withdrawal from the North American Free Trade Agreement or a trade war with China unlikely scenarios.”
The US is engaged in complicated trade obligations with 20 countries through 14 free trade agreements. Free trade partners account for nearly 70% of US exports and more than 80% of imports. The report considered two executive orders Trump recently signed to make trade policy tougher on foreign governments that subsidize companies that sell goods at below-market prices and calling for the Commerce Department to produce a report on every possible reason for the trade deficit in 90 days.
Cushman & Wakefield’s industrial research weighs the impact of trade with China—the US’s second-largest trading partner and its third-largest export market as well as a driver of the industrial-related warehouse demand in this country—and concludes that China remains too important of a trade partner for the US to engage in a trade war.
“China’s growing consumer class will exceed the entire US population by 2026,” says Tolliver. “Similarly, when you consider the impact of increased cross-border trade flows between Canada, Mexico and the US since NAFTA, it seems unlikely the US would withdraw.”
All three NAFTA partners recognize the need to update the agreement, Tolliver notes. However, the report notes that US trade with Canada and Mexico has increased more rapidly than with any other countries since the signing of NAFTA in 1995, and S warehouse inventory has increased by a net of 3.5 billion square feet.
Being an international gateway city, Miami industrial industry watchers are paying close attention. But the market is so diverse it may not feel major impacts from Trump’s moves.
“Vacancy rates in the prime submarkets such as Doral, Medley and Northeast and Central Miami-Dade are generally less than 5%,” JLL managing director Brian Smith tells GlobeSt.com. “Considering the delivery of 2 million square feet of new construction product so far this year, we continue to experience robust positive absorption. Rental rates have seen an increase, especially in the past 12 months, across the region’s industrial market. When compared to markets with similar characteristics and barriers to entry like Northern New Jersey or Seattle, it seems South Florida’s industrial market has plenty of room for growth in value and rental rates.”