What The US Election Means For Shippers

With less than two weeks until the US election, pollsters are still undecided on a clear winner. For shippers, this means preparing for two very different circumstances.

In the event of a Harris-Walz victory, current trading terms will continue to apply. Harris will likely continue to build on the agreements signed under the Biden administration, potentially expanding beyond the G7 focus to pursue more deals with a broader range of partners and allies.

However, in the event of Trump-Vance victory, the emphasis is on US economic interests at the expense of partners and allies. Tariffs are already being talked about at the Republican nominee’s rallies, and they aren’t just limited to China. While Trump’s proposed 200% tariffs on Mexico are significant, his suggested 60% tariffs on China, causes more concern.

To the US voter, the argument is that by applying these tariffs there will be more manufacturing in America, creating more jobs and boosting the economy. The counter argument put forward by economists is that this move will, in fact, boost inflation.

However, despite the intention is to encourage US companies to move manufacturing out of China into the US, business leaders typically look to emerging manufacturing markets with several already preparing to move production to Vietnam.

Of course, Vietnam is no stranger to relocating major businesses. Apple, Samsung, Panasonic, LG and IKEA have all either greatly or at least partially moved production to the nation. And while this is partly due to deteriorating relationships between the US and China, it’s also a consequence of rising labour costs in China and a preference to diversify supply chains.

For shippers, relocation isn’t a straightforward solution, whether that’s to the US, Vietnam or India. It requires investment, local knowledge, a vendor network and an understanding of how new supply chains would work.

It’s also not something that can be achieved in the short term. And as we approach Chinese New Year, a time typically fraught with delays and disruption, there could well be a massive advance ordering by US shippers to get as much inventory out of China as possible before the start of the CNY holiday following a Trump victory. The subsequent surcharges could amount to more than the whole of 2024 combined.

This isn’t to say there won’t be opportunities ahead, but the immediate picture is one of uncertainty and potential upheaval. But it doesn’t have to be, with a supply chain expert you can not only protect against vulnerabilities within your supply chain but also make cost efficiencies.

If you’d like to find out how we can help you, please get in touch via our email or calling 0161 491 0491.