The US Presidential Election took place on Tuesday November 5th and, contrary to poll predictions of a tight race, the result was a landslide win for the Republican Party.
President Elect Donald J. Trump will be due to take office in January 2025 and, as with any change of leadership in the most powerful country in the world, there is a period of international uncertainty. It is also generally accepted that this future American President’s actions can be hard to predict, which may have both positive and negative future political outcomes.
Following the Republican Party’s Election win, a post on November 6th by Fortune Magazine observed:
“Trump has proposed a 60% tariff on all Chinese imports and a universal 10% tariff on imports from all countries, a practice unseen since World War II. Six years ago, Trump called himself ‘a Tariff Man.’ This year, on the campaign trail, he stressed tariffs can be used as a penalty or threat of sorts to keep other countries in line and elevate America. At a rally in June, he said: ‘We are going to be so tough, and if a country is not going to behave, we’re going to tariff the hell out of that country.’”
Challenges to International Logistics
On November 10th, Supply Chain 360 posted their assessment of likely effects of these policies on freight transport and logistics. Opening with the words “As the new administration gears up to implement significant trade policy changes, the logistics sector braces for an impact on freight costs,” the article covers likely challenges to pricing levels of freight transported by both sea and air.
For instance:
“With the prospect of new tariffs ranging from 10% to 20% on U.S. imports and a staggering 60% on goods from China, the logistics industry is poised for a significant shift. Historical data from the Freightos Baltic Index indicates that similar announcements in the past have led to immediate increases in ocean freight demand and rates.”
And then again:
“The air cargo sector is not immune to these shifts, with rates for China-North America routes reaching yearly highs, driven by the peak season demand and sustained e-commerce volumes. However, regulatory changes, such as potential modifications to the de minimis exemption for Chinese imports, could reshape the landscape for air freight and e-commerce logistics, prompting adjustments in strategy among logistics and e-commerce companies.”
The post concludes:
“As the logistics industry contemplates the ramifications of proposed tariffs and other geopolitical and regulatory developments, the need for agility and strategic foresight becomes paramount. Stakeholders must continuously assess market conditions and adjust their operational and strategic plans accordingly to navigate the turbulent waters of international trade and freight logistics.
“The logistics sector remains at a critical juncture, with potential tariff implementations posing both challenges and opportunities. As companies gear up for possible changes, the focus on strategic adjustments and market analysis will be crucial for maintaining stability and capitalizing on emerging opportunities in the evolving global trade environment.”
Resilience and Flexibility
Specialising in the delivery of high value electronic equipment worldwide in collaboration with our international freight forwarding partner Tech Cargo, Relay regularly ships many important consignments to customers worldwide by all modes of transport, including to the USA.
Like other leading international logistics and freight forwarding operators, we have the high quality, highly professional and trusted supply chain networks that have the flexibility and resilience to adapt to economic and political developments.
We also have great confidence in the powerful support for the logistics sector from our proactive member association Logistics UK. On the issue of international trade it states:
“As the UK reaches out for new international trade deals Logistics UK is committed to safeguarding members' interests across all logistics modes, providing on the ground influence, but also equipping members with a flow of timely, and commercially useful information. Whether it’s chairing the UK Air Freight Working Group, or its role within the Logistics UK administered Global Shippers' Forum, Logistics UK lobbies on behalf of the UK logistics industry and uses this privileged access to shine a light on everything from regulatory constraints to health and safety.”
The predicted trade policies of the future US administration have been described by some as protectionist, but we believe such labels can be unhelpful. It is important to see what emerges after the new administration takes power in January and what the ramifications might be. In the meantime, Relay wishes every success for the economic prosperity of the USA as the UK’s close political ally and leading international trading partner.