Trump’s promised tariffs bring uncertainty to air cargo industry

U.S. President Donald Trump promised an “overhaul of our trade system” in his inaugural address on Jan. 20, repeating his plans to raise tariffs. In his speech, Trump proposed forming an External Revenue Service to collect tariffs and declared his intent to retake control of the Panama Canal from Panama. [caption id="attachment_57146945" align="aligncenter" width="1600"] President Donald Trump has promised a 25% tariff on goods from Canada and Mexico. (Courtesy/Canva)[/caption] Trump did not elaborate in this speech on the tariffs he wishes to impose but said on the campaign trail that he would introduce a 60% tariff on Chinese goods and a 10% to 20% tariff on other imports. In late November, Trump threatened a 25% tariff on goods from Canada and Mexico. The U.S.-Mexico-Canada Agreement (USMCA) is the successor trade deal to 1994’s North American Free Trade Agreement (NAFTA). During Trump’s first term in office, NAFTA was renegotiated and the USMCA was signed into law early in 2020. Trade among the U.S., Canada and Mexico has grown almost 28% since 2018, when the countries began to renegotiate NAFTA, and reached $1.6 trillion in 2023, according to U.S. government data. USMCA is set to be reviewed in July 2026 by the three countries, which can either revise or end the agreement. Uncertainty as Trump retakes Oval Office Panelists in today’s Cargo Facts webinar “ACMI, CMI and Charter in 2025: Challenges and Opportunities” agreed that the second Trump creates a lot of uncertainty for the ACMI, CMI and charter markets. Watch the webinar here. Plans seem to change rapidly, sometimes multiple times in one day, Richard Broekman, chief commercial officer and head of sustainability at Atlas Air Worldwide, said during the webinar discussion. “Clearly there have been a lot of threats that there will be very, very big tariffs that have been toned down,” he said. “I think the new administration in the U.S. seems to want to have a negotiation position.” Regarding Trump’s promise to increase tariffs on Chinese goods, Broekman expects there “to be a lot of discussion around this topic for the whole year” and a “very steep tariff, which would hurt everyone, including the economy in the U.S.” Increased tariffs on Chinese goods would likely reduce shipments from Asia to the U.S., which could increase demand in other regions, Unndor Jonsson, vice president of sales and marketing at Air Atlanta Icelandic, responded. Regardless, the ACMI, CMI and charter industries are “incredibly adaptable and ... flexible,” Russi Batliwala, group chair of Chapman Freeborn, said during the discussion. “If something happens, we will react,” he said. Tariffs against closest US neighbors The new president aims to impose the 25% tariff on Mexico and Canada and, while this could have serious implications for trade between the countries, it is unlikely to affect the air cargo industry, Stan Wraight, president and chief executive of Canada-based consultancy SASI World, told Cargo Facts . “Re air cargo, [there will be] zero effect as 99% moves by truck, factory to factory, not via airfreight,” he said. “Any trans-border airfreight is mostly the integrators, and that’s traffic usually not for the USA but for international destinations.” However, increased tariffs could lead to retaliatory tariffs. “Of course, retaliatory tariffs will be applied, hurting American exports to Canada — one of the USA’s biggest markets,” Wraight said. Retaliatory tariffs from Canada and Mexico against the U.S. would likely “dampen cross-border trade and ultimately also economic growth,” IATA economist Ghislaine Lang said in a recent IATA webinar. During the IATA webinar, IATA Chief Economist Marie Owens Thomsen compared today’s situation with the U.S. in 1930, following the stock market crash, when the U.S. passed the Smoot-Hawley Tariff Act, increasing import duties. “We can't blame the tariffs for the crash, but we can totally blame the tariffs for the depth, length and duration of the recession that happened in those days,” Thomsen said. However, she noted that tariffs in 1930 were higher than they are now, so even with boosted tariffs and retaliatory tariffs this year, “it will probably not be as bad as in 1930.” Boosted tariffs against China Trump’s America First Trade Policy memo, issued yesterday, also directs government agencies to: Report on the state of U.S. manufacturing and “destructive trade deficits”; Reevaluate steel and aluminum tariffs; Track China’s compliance with trade agreements; and Assess the growth of de minimis imports . New tariffs on Chinese goods “would likely result in retaliatory measures” from China, Glyn Hughes, director general at TIACA, previously told Cargo Facts . “Ultimately, protectionism will impact global trade and therefore demand for air cargo services,” Hughes said. “Conversely, a focus purely on China could have the effect of shifting global production to other parts of Asia and therefore we could see new trade patterns emerging, adding to air cargo demand. However, this transitional approach to production would cause short-term disruptions.” Register now for Cargo Facts' essential regional events for industry stakeholders: Cargo Facts LATAM 2025 on Feb. 10-11 at the Pullman Sao Paulo Guarulhos Airport in Brazil; Cargo Facts Asia 2025 on March 24-26 at the W Shanghai in China; and Cargo Facts EMEA 2025 on May 6-8 at the Shangri-La Bosphorus in Turkey.

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