Throughout 2018, the heated trade war between the U.S. and China has been full of twists and turns. The changes in taxes is an effort to boost the American economy by encouraging less outsourcing and bringing more manufacturing to the U.S. However, some new policies put into place earlier this year have caused difficulty for multiple industries. But what does this all mean for the trucking industry? Could the new tariffs mean less trade and an end to the demand for truckers across the U.S.? Here is what you need to know regarding the new tariffs against China.
Trade War with China
The trade war between China and the U.S. has been a roller coaster, especially throughout 2018. Not only has the U.S been levying tariffs on over $250 billion of imported goods out of China, but China is fighting back with $110 billion on the U.S.
Now, as 2018 comes to a close, the nation awaits the $267 billion in tariffs against China taking effect on Jan. 1. This round of tariffs is expected to hit far closer to home, as businesses of all sizes and industries, as well as consumers, feel a direct effect. Prices on consumer goods including tires, furniture and especially technology are expected to be the first to rise dramatically.
An Argument for Tariffs
Over time, those in favor of the tariffs are hoping the new taxes will boost the American economy. Because of the new tariffs, businesses will be able to charge higher prices for consumer goods. Additionally, domestic producers will profit more by investing in factories on U.S. soil. In theory, this will create millions of new jobs in the U.S. and improve the economy exponentially.
However, the higher taxes mean higher prices for the American people as well as businesses big and small. This could potentially cause the U.S. economy more harm than good, as business struggle to stay afloat while adjusting to the new costs.
New Tariffs Already Affecting the Automotive Industry
The industry in the U.S. already feeling the effects of tariffs includes the automotive industry, which is having to dig deep to afford the new taxes on vital materials like steel and aluminum. In fact, because of the rise of cost in imported goods, some American-based factories are considering taking their business overseas to avoid the taxes.
This is the case for Harley-Davidson. Their chief financial officer, John Olin, projected the new tariffs would cost them an extra $40 million in 2018, due to the increased cost to import materials. This economic hit has left the motorcycle company to consider moving production out of the U.S. entirely.
New Tariffs Could Directly Affect Consumers
While most other tax changes have not directly affected American consumers, these new tariffs against China could result in price increases on things people purchase every day. From canned goods to technology, large retailers like Target and Walmart have expressed concern about being forced to raise prices on their imported products.
In September, the director of global government affairs for Walmart wrote a letter to U.S. Trade Representative Robert Lighthizer discussing the impact the new tariffs could have on the American people. The message listed everything from clothing to dog leashes that would see a raised price after the new tax took effect. However, the letter stated that the worrisome increases could be on electronics, cosmetics and products for children. Walmart’s representative said she feared, “Increased costs associated with new tariffs could lead families to turn to cheaper, but less safe options to offset new financial burdens.”
What it Could Mean for Truckers
So, what does this mean for truckers across America? If less goods are entering the country and Americans are buying less due to price increase, it seems that truckers could also see a decline in job security. However, while these new tariffs could mean a lot of adjustments for businesses big and small, the chief economist for Freightwaves, Ibrahiim Bayaan, believes the demand for truckers will continue to increase.
He projects that these new tariffs will inspire businesses across the country to stock up on goods before the new tax comes into play. This would mean, in the short term, even more work for truckers as the surplus of goods flow in. Bayaan states that this extra backup of goods will give businesses time to come up with a plan to stay ahead of the tariffs and not allow it to affect their business or their prices for long.
This means that business will remain consistent and even increase for truckers. As more factories and manufacturers become a part of the U.S. economy, the transportation of goods will only grow in demand. Into the foreseeable future, despite any tariffs or AI advancements, there will still be a large need for commercial truck drivers all around the country.