SINGAPORE: Trade tensions between the US and China will hammer air cargo this year, an industry body warned Tuesday, the latest sign the tariff slugfest is damaging the global outlook.
The world’s top two economies have been locked in a trade war since last year, swapping tit-for-tat duties on goods worth hundreds of billions of dollars and sending markets into a tailspin.
The fallout has gone far beyond their shores, with manufacturing in many export-dependent Asian economies taking a hit. Trump confident about getting trade deal with China
In the latest sign of the dispute’s effects, the International Air Transport Association (IATA) sharply cut its forecast for air cargo growth this year, citing US-China tensions as a major factor.
It said air cargo volumes are expected to grow 2% this year, nearly halving its projection made in December for 3.7%.
Air freight traffic contracted 1.8% in January alone, IATA Director General and Chief Executive Alexandre de Juniac told a conference in Singapore.
“We are facing a problem with world trade… Cross-border trade is weakening very sharply and that’s the thing that’s damaging our business in the cargo world,” IATA Chief Economist Brian Pearce said. The group said uncertainty over Brexit and general protectionism was also hitting air cargo growth.
US and Chinese officials have said they are making progress toward a resolution of the trade dispute but conflicting messages out of Washington and Beijing mean it is still not clear when a deal may finally be sealed.
Earlier in December, factory activity weakened across much of Europe and Asia as the trade war and a slowdown in demand hit production in many economies, offering little reason for optimism.
Last month, President Donald Trump delayed an increase in US tariffs on Chinese goods thanks to “productive” trade talks.
The announcement was the clearest sign that China and the United States were closing in on a deal to end a months-long trade war that has slowed global growth and disrupted markets.