President Sets China Travel Quarantine

Michael Best Strategies

Public Health Emergency Declared
The Trump administration declared a public health emergency in the U.S. Friday in response to the global coronavirus outbreak. In addition, the White House held a public briefing by the Coronavirus Taskforce he established.
The declaration of a public health emergency — which will become effective Sunday at 5 p.m. ET — enables the government to take temporary measures to contain the spread of the virus, which has been confirmed in seven people in the U.S.
The action means that U.S. citizens who have been in China’s Hubei Province in the past 14 days will be subject to 14 days of mandatory quarantine if they travel back to the United States.
Federal officials announced that American citizens who were evacuated from Wuhan earlier in the week would be quarantined for 14 days at March Air Reserve Base in Southern California. The action represents the first time in 50 years the U.S. has instituted a quarantine order.
In addition, the U.S. is temporarily suspending entry of most travelers arriving from China, or who have recently been in China, if they are not U.S. citizens.”Foreign nationals other than immediate family of U.S. citizens and permanent residents who have traveled in China in the last 14 days will be denied entry into United States,” Azar said.
Further, U.S. citizens who have been in other areas of mainland China in the past two weeks will be subject to screening at the airport of entry and to heightened monitoring for 14 days.
Finally, the U.S. State Department has issued a Travel Advisory: China Level 4: Do Not Travel.
Federal health officials pointed to the fast global spread of the virus as justification for the move. The World Health Organization declared a global health emergency on Thursday.
U.S. officials explained their reasoning for an intense focus on this outbreak, which so far has not led to any deaths in the U.S., though it has led to more than 250 in China. “I often get asked [about the] influenza outbreak,” which has led to at least 8,000 deaths in the U.S. this season, said Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, which is part of the NIH. “People want to know why we’re paying so much attention to the novel coronavirus.” In contrast to the seasonal flu toll, which is predictable, Fauci said, “there are a lot of unknowns [with the coronavirus].” “The number of cases has steeply inclined each and every day,” Fauci noted. In addition, at the beginning of the outbreak, it wasn’t clear whether an infected person without symptoms could transmit the virus to another person.”Now we know for sure that there areasymptomatic infections,” Fauci said.

Centers for Disease Control and Prevention officials said it was the first quarantine order issued by the federal government in over 50 years. The last time a quarantine was used was in the 1960s for smallpox.
Economic Impact of Virus
And on the economic front, a Goldman Sachs Group report already is predictingthat the outbreak of the coronavirus will cut U.S. economic growth by 0.4 percentage point in the first quarter as the number of tourists from China declines and exports to the Asian nation slows. The Federal Reserve said it is watching for any economic fallout. And another expert said if the virus follows the path of the SARS outbreak in 2003, China’s estimated economic growth could fall 0.5 to 1.5 points from a projected 5.9 percent growth rate this year. American businesses are already being affected, with airlines canceling flights to China and other companies restricting travel to the country or warning of disruptions to their supply chains.
China’s neighbors would also absorb the highest effects next to China, especially those dependent on tourists from China — among them Hong Kong, the Philippines, Singapore, Thailand and Vietnam.
It is also likely China’s factories would be slowed by additional restrictions on transportation that limit factory production, and that could become a global event. This impacts manufacturing in the U.S. as well as in China, because China is the major supply chain source of products needed by U.S. manufacturers especially in the Midwest where the majority of manufacturing is located. It could hit iron ore mines in Australia and India that feed raw materials into China’s smelters. It could limit sales of computer chips and glass panel displays made at plants in Malaysia and South Korea. It could trim sales of factory machinery produced in Germany and auto parts made in the Czech Republic, Hungary and Poland.

And the energy industry is also being impacted. OPEC members are considering holding an emergency meeting, as oil prices sink on concern the coronavirus outbreak will hit demand. They have already unveiled deeper production cuts just over a month ago, and as these are put into effect, Saudi Arabia — which has borne the greatest burden in reducing supply – has slashed output to the lowest since 2014. As airlines across the globe suspend flights to China, oil prices have slumped, adding to the pressure on OPEC to extend or deepen the group’s oil-production cuts. Brent crude has dropped more than 10% this month even after the U.S. killed a key Iranian general and Libya’s oil production was cut to near zero following a blockade of the nation’s ports that virtually halted exports. Saudi Arabia has said it’s “closely monitoring” the effect of the virus on the oil market.
Finally, the recent agreement between the U.S. and China, effective February 14, in which China made commodity purchase pledges of $32 billion over two years of soybeans, grain, meat, cotton and dairy, will likely be impacted. There were already many that doubted that was achievable. from pre-trade war levels were achievable. That was before the coronavirus hit. An interesting note here is that China pushed for wording in the accord that ensured its purchases complied with both WTO rules and the laws of supply and demand — insulating it somewhat against unforeseen events like a demand shock
Please feel to contact the MBS Trade Team for more information or advice.

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