Sunday, February 12, 2017

The Economist "Logistics companies fear the return of hard borders: Boxed in"

       This article highlights the new challenges facing international trade because of the protectionist policies from Trump and the British leaving the European Union. The growth in express delivery has been record breaking for some companies. The ease and mobility of purchasing things and moving it through countries is due to free-trade areas and lower tariffs. The ease of shipping between countries comes from strong international policies that promote international trade. However, in recent months the changing policy to protectionism has created problems for international trade. “Mr. Trump’s threats to raise tariffs on goods from China and Mexico, together with the indication last month from Theresa May, Britain’s prime minister, that the country will leave the EU’s customs union,” cause concerns that trade will fall dramatically causing problems for manufacturing countries and for shipping services. With the change of a physical boundary between UK and the EU it’s unlikely to cause physical disruptions because packages have already gone through EU checks. This article outlines the difficulty in classifying some products for the proper tax. Additionally, with protectionist policies coming from Trump and the British it is likely that consumers and producers will start seeing huge expenses similar to these “Sending an item from Britain to Switzerland (outside the EU) costs 150% more than it does to Italy (inside the EU)”.  This will not only cause problems in the shipping industry but it will be a huge expense for domestic manufacturers as they will be limited to only domestic consumers.      



2 comments:

Anonymous said...

If United States put higher tarrifs on foreign goods, there is a good chance that other nations would do the same for American products. So, logistics companies might take a hit harder than the article stated.

Unknown said...

Protectionist policies are relatively deceiving. At the same time that they are intended to protect the domestic market and promote local manufacturing, thus creating more jobs, it disregards the cost benefit issue that makes every business prosper. Global markets offer not only access to lower cost structures (raw materials, for example) but also cheaper labor. Imposing high tariffs will demotivate companies to make business with the US and the country will suffer a backlash.