AUGUSTA — On Wednesday, Richard D’Abo was facing the same kind of questions that many business people across America had been asking themselves since Donald Trump had become the president-elect only hours earlier: What will international trade look like in a Trump presidency?
D’Abo, chairman of the board for Eimskip, the Iceland-based transportation company that links markets across the Northern Atlantic region and across the world, was the keynote speaker at the Mainebiz 2016 Momentum Convention. His message to Maine-based businesses is that Eimskip, which in 2013 opted to make the Port of Portland its North American logistical hub, is that the company wants to work with them to create market opportunities, find new customers and build new relationships within the extended reach of its enterprise.
“Challenge us,” D’Abo said. He put up a map of the North Atlantic with Iceland in the middle, showing its reach into Maine and Canada’s Maritime Provinces as well as to the major ports of Europe, stretching from Norway down to the Netherlands and the relatively short distances that separate them.
But the biggest challenge both Eimskip and anyone in international trade has to navigate may the uncertain environment that is emerging with the election of the Republican nominee. During his campaign, Trump repeatedly called for withdrawing from some trade agreements and renegotiating others as well as imposing tariffs on goods from China and Mexico to improve the economic lot of the United States.
D’Abo was measured in his answer to the question.
“It’s way too early to rate it,” he said. “Restricting trade isn’t necessarily the answer. It’s too much of a hot potato. Hopefully, pragmatism prevails.”
Trade, free or otherwise, is a complicated issue.
“You don’t just harvest something and stick it on a boat,” said economist James Breece, a University of Maine associate professor of economics with expertise in international economics.
Trade encompasses tariffs, which are taxes or duties that are paid on imports or exports and the movement of goods; and a host of nontariff activities, from permitting and licensing to distribution and financing. Changing any of those pieces can mean consumers could pay prices that are higher or lower than they are now.
Aside from all of that, he said, is the issue of currency and whether a country is devaluing its own money to gain a trade advantage.
Although trade pacts such as the North American Free Trade Agreement suggests free trade exists, it doesn’t really, Breece said.
“There are no obstacles at all in free trade,” Breece said. “We don’t have free trade. I would say we’re working toward free trade and relaxing tariffs and nontariff barriers.”
A large number of country-to-country agreements currently exist, and they have all been negotiated with the idea of fair trade.
“That means,” he said, “whatever you impose on me, I impose on you.” If one country were to impose tariffs, he said, there would be retaliation, but the complicated nature of manufacturing obscures who would win and who would lose.
Trade policies are negotiations that take into account factors such as how much union labor is used, he said, and how many American components are in a product.
“Take BMW,” he said. Its parts are made outside the United States, but the vehicles are assembled in U.S. plant for export to the world.
“It’s fair to say that the global economy is so flat and countries are so far integrated now that any change is going to be felt at home,” he said.
For Eimskip executives, the goal is to transport not necessarily raw materials for manufacture elsewhere but value-added products, and they see potential in food products that originate in Maine, including lobster.
John Hathaway is in the lobster-processing business. He operates Shucks Maine Lobster from a facility in Richmond, which removes lobster meat from its shell using water pressure.
“We sell our product in the States to people who ship overseas,” Hathaway said. He said he recently met with people from Sweden who are interested his product and if the deal goes through, Shucks would ship with Eimskip out of Portland.
“The cold storage facility they are developing in Portland would make it very convenient for people who want to have a value-added Maine product. It would open more markets, and we would probably be very aggressive going into European markets.”
Shipping with Eimskip is cost-effective, and the customer in Europe would see that savings, he said.
Hathaway, who said he’s a Trump supporter, isn’t concerned about trade in a Trump presidency.
“We should have a wait-and-see attitude to see what he will do with the trade agreements,” he said. “He will improve and strengthen them.”
Hathaway said U.S. trade deals have a lot of room for improvement. It’s a mistake, he said, to export raw materials so that other countries can add value to them and create jobs, rather than the jobs being created here.
“We need to build a manufacturing base in this country,” he said. “I can’t see how you can disagree with that.”
Kim Vandermeulen operates a manufacturing company in Winthrop. Alternative Manufacturing makes printed circuit boards that are shipped all over the world.
Coincidentally, Alternative Manufacturing is making a product for an Icelandic company that monitors temperature and humidity in cargo containers using satellite technology.
Vandermeulen’s trade relations are fairly simple. The company has a customs broker who manages the details of shipping overseas, and if the order is small enough, Federal Express delivers it.
“We see no tariffs as we look into these foreign locations. We sell to multinational corporations, so we’re not sitting here worrying about it at all,” he said.
“At the microeconomic level, I an not worried that trade policies will have much impact,” he said. “But at the big level, maybe.”
For Eimskip, the trade equation for now looks positive. With investments in the port, including the cold facility and rail improvements, the company is making a bet on Maine.
“We are as competitive as anyone can be in logistics in any of these small, specialized markets,” D’Abo said in an interview with the Kennebec Journal. “We are one of the few carriers, because the markets are small, that calls in these markets.”
Larus Isfeld, managing director of Eimskip, based in Virginia Beach, Virginia, said Maine has great potential.
“In the United States, Maine is at the end of the universe,” Isfeld said. “If you close off trade, then (Maine) is as far away from any market as you can possibly be.” In that case, the best place to be is the Midwest, with easy access to most of the country.
“If you are closed off, Maine is not a good place to do business,” Isfeld said. “You have to look at yourself as the center. Change the globe and change your perspective.”
Jessica Lowell — 621-5632
Twitter: @JLowellKJ
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