The contours of a new trade order are becoming visible

The winners and losers of a trade reset are hard to discern but the US message of might being right is clear

- RAHUL JACOB

The US administration's 9 July deadline for trade deals and tariff announcements has come and gone and been extended to 1 August. Since 'Liberation Day' in April, which should have been called 'Deliberation Day' because it was merely the starting point in negotiations, the number of countries with US trade deals can be counted on the fingers of one hand. Even so, fuzzy contours of the giant jigsaw puzzle that is global trade are beginning to take shape. Inevitably, the world's multinationals and giant retailers have been slow to move production and factories for the understandable reason that this takes time. Instead, they have filled up warehouses with goods, racing to beat changing deadlines for new tariffs while waiting to get some clarity on US policies before they invest in new factories in different parts of the globe. This is understandably a process that takes years, not months. Supply chains are complex operations that take years to build.

While businesses wait warily and watch for new announcements, uncertainty is at an unprecedented level. The hedging devices being used are bonded warehouses, where goods can be stockpiled but tariffs are paid only when the wares are taken out of storage and sent to distributors or retailers in the US. "Storage costs for bonded warehousing are now up to four times the cost of non-bonded premises," the Financial Times reported earlier this month. "Another ripple effect is port congestion—ships still carry 90% of global trade."