By Glyn Hughes, director general, The International Air Cargo Association (TIACA)

International trade in goods accounts for USD 25 trillion each year. Of this amount air cargo transports about 30% of the total, amounting to over USD 8 trillion. So, air cargo is critical to a flourishing global economy, and a flourishing global economy is crucial for air cargo success.

With this symbiotic relationship it is imperative that the entire industry stay current with geopolitical actions which impact the trading environment.

Firstly, we must stress that TIACA fully supports open and free trade as the most effective way to support global economic prosperity helping all communities improve the lives of their citizens.

Therefore, any restrictive measures that are introduced has the potential to negatively impact the delicate balance that exists in the trade environment.

It is also worth noting that e-commerce accounts for about 20% of global air cargo tonnage.

With that backdrop, lets review how 2024 ended and how 2025 has started.

President Trump takes office

Air cargo demand grew by more than 11% in 2024 with capacity growth only about a third of that figure, meaning that load factors and yields increased accordingly.

Global GDP grew by about 3.2% with inflation continuing to reduce as central bank imposed tight monetary policy has had the desired effect. Energy costs have also subsided from their 2022/2023 highs. With The IMF projecting growth in all markets and regions we closed 2024 with optimism that good fortunes would continue.

However, on November 6, 2024, the USA went to the polls and elected Donald Trump as its 47^th President. Much of his ticket was based on economic rebalancing and the use of tariffs to generate significant treasury receipts to reduce USA taxes and inflation even further.

President Trump took office January 20, 2025, and the world went into immediate ‘stand by’ mode, with consumers holding a steady position awaiting what happens to the prices of their expected purchases and with that we have seen that US consumer confidence has now hit a 9-month low.

Globally, economic partners, braced for the anticipated tariff introductions and many drafted plans for potential retaliatory measures.

Tariffs are not new to the global economy and a recent report by the WTO indicated that over 170 states issue tariffs to protect certain strategically important domestic industries or to combat perceived unfair state subsidies provided to competitors.

We saw early on what the path ahead with geopolitics and trade becoming even more interwoven would look like when the President of Colombia refused permission for a US repatriation flight of illegal immigrants to land. President Trump immediately introduced a 25% tariff on all Columbian exports to the US, and considering this occurred in the middle of flower transport season for Valentine’s Day the move resulted in the Columbian position being reversed and subsequently the tariffs were immediately revoked as they had achieved their political aim.

Attention then turned to Mexico, Canada, and China. With the political objective to increase border restrictions to limit illegal immigration and fentanyl crossing. Mexico and Canada immediately took border actions, and the tariffs were suspended for one month.

Additional to a 10% tariff on exported goods to the USA, China, which accounts for about 26% of global production and the source of most global e-commerce, also suffered a second hit, targeting the growth in e-commerce.

Over 1.4 billion international e-commerce shipments landed in the USA during 2024 and the vast majority of those fell under the USA de minimis limit of USD 800 meaning they passed through with simplified filing and no duties being levied.

The US president has certain executive powers that allows specific actions to be taken when it is deemed best for national security, including economic security.

Section 201 of the Trade Act of 1974—Allows the President to impose temporary duties and other trade measures if the U.S. International Trade Commission (ITC) determines a surge in imports is a substantial cause or threat of serious injury to a US industry.

Section 232 of the Trade Expansion Act of 1962—Allows the President to adjust imports if the Department of Commerce finds certain products are imported in such quantities or under such circumstances as to threaten to impair US national security.

Section 301 of the Trade Act of 1974—Allows the United States Trade Representative (USTR) to suspend trade agreement concessions or impose import restrictions if it determines a US trading partner is violating trade agreement commitments or engaging in discriminatory or unreasonable practices that burden or restrict US commerce.

Applying these powers the de minimis exemption was removed for imports coming from countries to which a tariff was applied.

When this was implemented, it was immediately felt at major US e-commerce gateways with millions of shipments each day now requiring filings and duties being collected. Within just a few days the sheer volume of transactions resulted in clearance and collection blockages to the extent the CBP requested the deferment of the de minimis exemption application. But that change will be coming so e-commerce shipments into the US from China and other countries where tariffs have been levied will be hit with increased costs, filing charges and time delays. Air cargo is braced for impact.

So, what’s next?

Early April will see the re-introduction of the 25% tariffs on Mexico and Canada. And a sweeping tariff recently introduced on copper has already resulted in price challenges in the sector with risks of job losses.

Next, attention will turn to the EU, particularly the perceived inequality in auto sales.  President Trump has expressed frustration at the overall trade imbalance, and it is anticipated he will soon issue the next round of tariffs.

Collectively these on then off tariffs or mere threats of further tariffs seek to destabilise the delicate balance of international trade.

Consumers, faced with uncertainty over future prices and maybe even goods availability become cautious and that risks economic growth and air cargo demand.

Tariffs themselves are inflationary by nature and that risks counter measures being implemented by central banks and that also adds to economic uncertainty.

Border complexity adds costs and time and that creates risk to continued double digit growth in e-commerce.

Overall, we can expect to see the international trade environment remain volatile for the foreseeable future as geopolitics and trade become much more interwoven. The message to air cargo for 2025 is buckle up, turbulence ahead. But let us hope some smooth air can be found at cruising altitude so we can continue our journey to industry growth and prosperity.

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