Independence Fray: Taking a holiday on free trade

Today, we at Air Cargo World are taking the day off to celebrate the United States’ hard-won independence from its Mother Country 242 years ago. We Americans will break out the usual red, white and blue bunting and march in star-spangled parades. But this year, the celebration feels a little different – the fireworks a bit too loud and hot to the touch for some of us.

That’s because the Friday after the 4th of July will bring about the 6th of July – the day the 25 percent tariffs on US$34 billion worth of Chinese goods will be imposed under the Trump administration, to be followed by a reciprocal set of tariffs from China on U.S. exports. The U.S. already imposed a 25 percent tariff on steel imports and 10 percent tariff on aluminum from the European Union, Canada and Mexico since June 1, and those erstwhile friendly trading partners have responded in kind, as well.

In terms of world trade, these developments are being largely described as an avoidable disaster – for the logistics business to flourish, barrier-free trade is an essential ingredient. Trump has proven to be a uniquely divisive leader in the U.S., but he has galvanized much of the global logistics industry in opposition since he began following-through on his anti-globalization rhetoric. From FedEx’s Fred Smith, to DHL’s Frank Appel, to Alibaba’s Jack Ma, the chorus against our imminent “trade war” has been almost universal.

At its annual meeting last month in Sydney, IATA’s director general Alexandre de Juniac said, “The more you restrict trade, or migration, or travel, the less prosperity you get for this industry.” Earlier this spring, TIACA chairman Sebastiaan Scholte, pointing out that the U.S. steel tariffs will hurt far more American manufacturers than it will help steel makers, added that, “No one comes out on top in a trade war.” While most of the goods affected by the tariffs will not directly impact air cargo, there have been some early signs that an expected slowdown in airfreight demand this year may be intensified by these new trade barriers.

Meanwhile, the airfreight industry is doing what it can to ensure that, regardless of the protectionist climate, the goods being shipped by air are moving as quickly, safely and profitably as possible. For instance, our July 2018 cover story this month, “Uncertain Certifications,” focuses on IATA’s CEIV program and whether or not it is the best course of action for bringing unity to the pharmaceutical supply chain and improving quality to the level that shippers are demanding.

In our second July feature, which we will post online tomorrow, associate editor Nina Chamlou looks at one of the recent beneficiaries of unfettered world trade and strengthening markets – the Latin American airfreight industry and its remarkable recovery. Thanks to a rising, wealthier middle class in China, many South American countries that are emerging from a decade-long recession are finding new consumers willing to purchase their abundant supply of perishable foods, just as they are purchasing more electronics and automotive goods from China.

So, happy birthday, United States. With President Trump’s “America First” policies in full swing, we may be the only celebrant at today’s independence party. But let’s hope that, by this time next year, some of the walls erected will become more porous, some of the ruffled feathers of our traditional trading partners will be smoothed and that – most importantly – all of us are a little more united.

We’ll be back tomorrow with more breaking news at Air Cargo World.