By David Pendered
Although President-elect Trump has shaken global commerce with his call for revamping U.S. trade agreements, an economist who specializes in infrastructure says Georgia has no reason to change its investment strategy at state-owned seaports.
“It’s a little too early to panic about any extreme outcome,” said Walter Kemmsies, managing director, economist and chief strategist at JLL. The firm specializes in commercial real estate services and operates in 80 countries.
Kemmsies said he’s advised the Georgia Ports Authority for about 10 years. GPA arranged for Kemmsies to respond to questions related to GPA’s decision to take receipt on Dec. 5 of four cranes designed to handle the huge ships now using the widened Panama Canal and calling on Savannah.
The four extra-large cranes cost about $12 million each. Given the uncertainty over global trade, in light of Trump’s campaign comments, GPA may have reconsidered its commitment to building facilities to handle the world’s largest ships. Kemmsies suggested that response would be short-sighted.
“It’s a long-cycle investment,” Kemmsies said. “Infrastructure is designed for 50 years; you fix things that break and get maybe 75 years out of it. Cranes and strengthening of the base is done on a long-cycle view.”
The long-cycle view on foreign trade is positive, Kemmsies said. That’s because consumers in developing countries will buy an increasing amount goods. The global middle class of 2.5 billion is to double to 5 billion by 2030, he said.
“The growth will come not from the U.S., but other countries,” Kemmsies said. “And the U.S. is a damn good place to make a lot of things and export them. “
Statewide, global commerce generated 25,341 new jobs and $4.4 billion in investment during the fiscal year that ended June 30, according to an Oct. 28 GPA statement that cited a report by the Global Commerce Division of the Georgia Department of Economic Development.
Metro Atlanta has benefited and will continue to benefit from the growth of the Georgia ports’ import/export trade.
“You fly into Atlanta and see from the air that Atlanta is replete with distribution centers, a massive cluster,” Kemmsies said. “Atlanta is a central element of the U.S. freight movement network. Things come into Atlanta and are distributed North, South, and even East, West.”
Though Kemmsies didn’t mention it, GPA officials have in the past noted that the goods transported through Atlanta create jobs in the legal, financial and technologies industries, in addition to the logistics industry.
Kemmsies also addressed a recent economic forecast that Trump’s tariffs on imports will harm Georgia’s economy.
Georgia State University’s top economist, Rajeev Dhawan, predicted Nov. 16 that tariffs would cause the dollar index to rise. That will result in higher interest rates, which will dampen demand for big-ticket items such as vehicles and homes. Georgia’s employment growth will swoon until 2018 as a result of the expected tariffs, Dhawan predicted.
Kemmsies expressed a different perspective.
For starters, Kemmsies noted that tariffs on imports would not affect exports. Because Georgia’s ports are equally balanced between imports and exports, at least half its trade should not be affected by tariffs. If other countries respond with their own tariff’s on U.S. goods, they likely would be shipped and consumed in the U.S. because their prices are competitive with imports after the tariff is applied.
Addressing another dimension of global trade, Kemmsies contended that global trade is so intertwined that informed policy-makers will be slow to make sweeping changes to current policies.
“It’s not as easy today, in this complex industrializing global economy to isolate one thing and think that, if you kill it, all the bad things will no away,” Kemmsies said. “No. There will be negative consequences.”
For example, Kemmsies said that easily 40 percent of a made-in-America vehicles are built with components from two dozen countries: The slides for driver-side car seats are made in northern Europe; windshields and other glass products could come from other parts of Europe.
In another example, Kemmsies said that every dollar worth of goods imported from the U.S., 40 cents is imported from the U.S.
“Trade deficit with some countries is smaller than you’d realize,” he said.
This is where Kemmsies anticipates that Trump’s interest in achieving his goal of greater employment growth will outweigh any knee-jerk reactions aimed at cutting the trade deficit.
“In the realm of politics, I don’t think that’s going to happen,” Kemmsies said.