The US-China trade war has already proven damaging to Chinese and American workers, and has caused investor panic everywhere in between. In the Western Hemisphere, the volatile trade policies coming out of Washington have disrupted the economies of Mexico, Canada, and to a lesser extent those of Brazil and Argentina. Often overlooked, though, is the negative impact that the Trump administration’s unpredictable trade policies has upon Panama.
“Fewer ships from China and the United States could use the Panama Canal if trade tensions escalate between the two economic giants, but the dip could be offset by grain exports from north Brazil, the head of the organization that operates the waterway said.
The canal, which cuts through Panama creating an essential shipping route between the Atlantic and Pacific oceans, is a major source of revenue for the central American country.
“Most cargoes passing through the Panama Canal come from or go to the United States and China,” Panama Canal Authority chief Jorge Quijano told Reuters late on Thursday. “Tensions between them could ultimately have an impact on the amount of loadings using the waterway in any direction.”
The administration of U.S. President Donald Trump is readying a list of $200 billion in Chinese imports on which it plans to levy tariffs in coming days, stepping up the trade war between the world’s two largest economies.
However, Quijano said he expected more bulk cargo from Brazil, the world’s largest soy producer, would boost canal traffic.
Brazilian soy has traditionally been shipped across the Atlantic and Indian oceans, but farmers in top soy state Mato Grosso earlier this year signed a memorandum of understanding with the canal to look at ways to cut transport costs and increase grain volumes using the waterway via ports in the north of Brazil.
New demand for U.S. liquefied natural gas (LNG) in countries including Japan and Mexico could also compensate for fewer vessels going to China, Quijano added, saying: “The canal has many ways to ease any impact.“