 Trump vow on new trade war ss shockwaves through supply chain, importers scramble to move up orders KEY POINTS (continue) |
Source |
American Shipper |
Post Date |
11/13/2024 |
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? wave of pre-ordering by retailers?ahead of new tariffs would be good for ocean carrier earnings power, according to Jefferies analyst Omar Nokta. However, he said overall volume gains are uncertain and longer-term, the issue is the potential significant slowdown in trade volumes in the coming years. ?lobal trade volumes have risen by 2x the rate of GDP growth this year, and are likely moderate to 1x in 2025, but could fall below that should tariffs impact trade patterns, which would be negative for ocean carrier earnings,?he wrote.
Republican tariff policy remains difficult to predict Trump has vowed to move fast on tariffs, with Robert Lighthizer, former U.S. Trade Representative during the first Trump term, telling Wall Street money managers in recent weeks that if Trump was reelected, he could start implementing his sweeping tariff proposals quickly after taking office, according to policy analysts at Piper Sandler.
But trade experts expressed caution on reading too much into Trump? tariff threats right now when attempting to analyze where policy s up. Matthew Rubel, who served on the Advisory Committee for Trade Policy Negotiation for the White House and USTR for both Presidents Obama and Trump, tells CNBC he does not see a global tariff as an outcome. In negotiations, everything will be on the .
?ariffs are a tool to be used as an offense to ensure we can trade freely and can build jobs domestically strategically in appropriate categories,?said Rubel. ?ighthizer, under Trump brought to life a policy which negotiated from strength and focused on bilateral agreements. The deals will be crafted to ensure we gain economically. It is nuanced and not one size fits all. Trump? administration will be clear on a business case,?he said.
Peter Boockvar, chief investment officer of Bleakley Financial Group, said the impact of the tariffs will dep on the ution.
?ep a lot on whether there will be ive tariffs on certain products/industries or will it be a scattershot approach that sprays them on all imports,?said Boockvar. ?he former the market can tolerate, the latter I don? believe it will.?
?t is an question what level of tariffs will be imposed,?Jensen said. ?rump has mentioned anything between 100-500% and it is therefore completely unknown what will actually transpire. But, again, that means significant uncertainty for U.S. importers, and the only way to reduce the uncertainty will be to import goods earlier.?
Stephen Lamar, CEO of the American Apparel and Footwear Association, said he expects Trump to announce new tariffs ?n the first few days of his presidency.?
?ompanies are deploying a range of strategies to mitigate the inflationary impact these import taxes will soon have. Unfortunately, there are no good tariff mitigation strategies; the challenge is to find the one that is least bad,?Lamar said.
He added that bringing in product before the inauguration is one approach, but it only provides temporary relief and the import surge this will is further complicated by upcoming freight issues, including the threat of another labor strike at East Coast ports, and the Lunar New Year, both in the second half of January.
?e will be working with the new Administration and Congress to make sure any new tariffs do not add to the regressive, misogynistic burden hard-working Americans already feel as a result of the existing tariff structure,?Lamar said.
National Retail Federation president and CEO Matthew Shay said in an email statement that his group is prepared to work with President-Elect Trump and Congress on effective trade policies that will increase America? competitive advantages in research, development and innovation, and will protect strategically critical infrastructure. ?owever, the adoption of across-the-board tariffs on consumer goods and other non-strategic imports amounts to a tax on American families. It will drive inflation and price increases and will result in job losses,?he added.
Mexico trade boom could be target
In addition to the tariffs, the future of the three-country free trade agreement that replaced NAFTA, USMCA, will also be a subject of renegotiation in 2026. President-elect Trump has already said he wants to renegotiate the USMCA deal he made in 2020. One key provision was a requirement for the countries to reviewing the trade deal after six years, a process that will in July 2026. Chinese manufacturing in Mexico to circumvent the Trump/Biden tariffs will be a likely part of the trade renegotiation.
Logistics companies serving the Mexico to U.S. cross-border trade tell CNBC new Trump tariffs can have a negative impact on historic cross-border truck trade. Through September, year-to-date cross-border trade between Mexico and the U.S. rose around 52%, a record.
Jordan Dewart, CEO of Redwood Mexico, which specializes in cross-border logistics, said leading up to and immediately after the election, his firm fielded many concerns from customers about the immediate proposed tariff changes that would impact northbound goods already in process to be shipped to the US.
?learly this would have a huge impact on both U.S. and Mexican companies,?said Dewart. ?ith over $2 billion crossing the border daily even a short term change would have huge repercussions and could cause companies to get ahead of these changes by importing their goods ahead of schedule.?
He added it will a short term need for storage at the U.S.-Mexico border and may increase overall trade volumes in Q4. ?he short-term impact of pulling freight forward will increase freight rates, especially in Mexico, where the driver shortage and fuel prices are already causing upward pressures,?Dewart said. ?he Peso, devalued 2.5% overnight, will provide some relief as most rates are negotiated in U.S. dollars.?
Proposed tariffs would cause some companies to further delay their investment in Mexico, according to Dewart, which has been booming. Many European and Asian-based companies have been investing heavily in Mexico as a way to shore up trade strategy. Companies including John Deere, which had been a target of Trump, and Tesla, have both announced recent pullbacks in manufacturing plans within Mexico.
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