In trade wars, there tend to many casualties and few winners. But in the current politically charged climate, a trade war is now a reality, as the United States decided in March to adopt an aggressive protectionist policy to correct what the Trump administration believes is a crippling trade deficit between the U.S. and several major trading partners.
In March, President Trump pledged to impose 25 percent tariffs on steel imports and 10 percent tariffs on aluminum imports from Canada, Mexico and the European Union. This month, the President said that, by July 6, the United States will impose stiff 25 percent tariffs on several kinds of Chinese goods, worth an estimated US$34 billion – a figure that could rise as high as $200 billion if the list of goods is widened.
Then, over the last weekend, another salvo was fired. China answered that it would match the value of the U.S. tariffs by placing their own tariffs on American perishable exports, including beef, poultry, pork, dairy products, seafood, tobacco and soybeans. China also hinted that another $16 billion in tariffs could be slapped onto more American goods, such as coal, crude oil, natural gas and medical equipment.
It’s a tense situation, and no one, as of today, seems to be willing to back down from the aggressive rhetoric. But if China, the North American countries and the E.U. start to follow through on these threats, what will it mean for air cargo markets?
Here are a few scenarios that Air Cargo World thinks may play out in the coming weeks or months: