The Trade Battle & How it Impacts Trucking Industry?

The Trade Battle & How it Impacts Trucking Industry
The Trade Battle & How it Impacts Trucking Industry

Naveen Nav


Naveen Nav
The Trucking Network

Changes to U.S. trade policy have a significant impact on freight. This does raise a concern for the Canadian Trucking industry given the fact of the trade that happens between Canada and the US on regular basis. It began on a non-descript Friday morning in March when most in the Western half of the globe woke to see the president had been beating endlessly on Twitter, disclosing to all of us that “exchange wars are great, and simple to win.”
Auto and commercial vehicle makers were shocked the taxes when they were first proposed and have perseveringly battled against them. There was a period in late March where it looked like Trump may yield a little on his opening salvo and consent to special cases for our NAFTA neighbors and the Euro-pean Union, yet inevitably those discussions separated. Except for a couple of singular bargains (with South Korea on steel; Argentina, Australia and Brazil on aluminum), the 25 and 10 percent duties are currently essentially around the world.
Days after the taxes hit Canada, Mexico and the EU, the Motor and Equipment Manufacturers Association (MEMA) — apparently the most vocal industry affiliation pushing back against the taxes — reacted.
I absolutely understand MEMA’s concern though when it comes to our sector of the transportation world, new tariffs also could have some major unintended consequences.  There are thousands of trucks operating through North American ports each day. Intermodal freight rates have rarely been higher. National utilization rates are surging. It takes more trucks to move freight from a port, to a rail yard, to a distribution center, to a store (or your front door) than it does to go directly from a manufacturing facility to a DC and then a store.
If this trade war continues unabated and we close our doors to outsiders, there’s going to be less freight to move. And that means fewer trucks, miles driven and parts and service needs.
In its recent Truckable Economic Activity (TEA) report, MacKay & Company wrote, “In the first quarter of 2018, exports were 13.4 percent of total TEA and imports were 10.7 percent of total TEA.” That combined share of 24.1 percent is among the highest totals in U.S. history, and nearly three times higher (8.3 percent) than the same period in 1968.
As the United States has grown, our commitment to global commerce has followed. That commitment has put more trucks on the road. We all know that stubbornly slamming the door on an economic strategy we’ve been using for 50 years isn’t going to fix things, either.
It’s definitely not going to sell more truck parts.