Earlier in 2018, the United States’ President Donald Trump threatened to implement tariffs on various lines of imports from countries such as China, Canada, Mexico, and the European Union nations.
Such tariffs triggered various ideologies from economists, trade analysts, and business magnates who questioned the sustainability of the existing trade ties between the US and other countries.
What baffled people is the series of tariffs that the President implemented on various products from China and North American nation bearing in mind that these nations contribute heavily to the country’s economy.
The famous trade war between the US and China targeted various products, including solar panels, washing machines, steel, and aluminum, among other vital commodities. Here is the breakdown of various tariffs implemented by the US government:
- 30 percent tariffs on solar equipment and washing machines from China
- 25 percent and 10 percent tariffs on steel and aluminum imports
- Tariffs on up to $60 billion of Chinese goods
- 25 percent tariffs on $50billion of Chinese imports including products of high industrial significance
Countries such as China, Canada, and Mexico retaliated by imposing counter-tariffs on US products. The retaliatory measures further frustrated the existing business ties between the US and other countries, with various fronts questioning the relevance of such tariffs.
The NAFTA Trade Deal and the De-escalation of Trade War
In the latter half of 2019, the US government embarked on various negotiations with the North American Free Trade Association (NAFTA) with the objectivity of easing trade restrictions and constraints that existed between the northern American countries.
The trade discussions were essential in relaxing the implementation of various tariffs on the products from nations under NAFTA agreements.
Since the formation of the North American Free Trade Association (NAFTA), the US government reap heavily on close business ties, with truck revenues reaching over $6.5 billion in 2016.
Such revenues impact profoundly on the country’s economy. Also, there is the de-escalation of the trade war between the US and China after a series of background consultations between the two countries bringing about the phase 1 agreement on investment between the two countries.
There are projections that the phase 1 agreement would yield over $75 billion in revenues from various economic stimulations in the period between 2020 and 2021.
What are the Benefits of the NAFTA Deal and Phase 1 Agreement on the Truck industry?
The truck industry faced uncertainties in the wake of the implementation of various tariffs on various product lines, with logistics giants such as Assetco facing uphill tasks to cope with supply chain dynamics.
However, after the revision of NAFTA trade agreements and the subsequent formation of the US-Mexico-Canada (USMCA), there are prospects of the proliferation of the trucking industry, as there are chances of returning to normalcy.
The trade deals have the potential to impact on the pending orders of new trucks, reestablish the high Cass freight index in the coming years, and maintain the jobs of over 30000 drivers whose jobs rely wholly on the handling of transborder goods.
Also, the deals have the prospect of increasing the import volumes from China and other countries in the coming years.
The trade tariffs imposed by the US government in the better part of 2018 affected the relationships, investment, and international relations between various countries.
However, the recent revision of NAFTA agreements and the subsequent easing of the trade war between the US and China bring new vigor and prospects in reviving imports and exports.
Certainly, the moves will benefit the trucking industry in the United States due to the increase in imports and transborder shipments.