The 2024 US presidential election could trigger a seismic shift in global supply chains, with logistics, trade, and tariffs at the heart of it. Trade policy often becomes a focal point in presidential debates, with candidates clashing over the role of tariffs on imports to the US.
According to sources, former President Trump, if re-elected, has proposed a sweeping American tariff policy, suggesting a 10% to 20% tariff on most US imports and a much higher 60% tariff on all imports from China. This would represent a dramatic shift in US trade policy, with significant consequences for importers and the logistics sector.
Continue reading to understand how the US presidential elections in 2024 will impact logistics trade and tariffs.
What is the link between trade, tariffs, and the US elections?
US political parties have distinct trade policy stances. Democrats generally favor free trade agreements and international cooperation, while Republicans often advocate for protectionist measures like tariffs to safeguard domestic industries.
Tariffs drive up the costs for businesses importing goods into the US, which, in turn, affects retail prices for consumers.
However, tariffs' implications go beyond pricing. As seen during the implementation of Trump's 2018 tariffs, there is often a ripple effect on container traffic and shipping costs. Importers rush to bring goods into the country before tariffs take effect, leading to bottlenecks in the supply chain.
Once tariffs are imposed, the cost of moving goods across borders increases, straining logistics operations and pushing up freight rates.
Thus, the US presidential election polls, depending on the trade policies proposed, can heavily influence global trade flows, logistics costs, and the dynamics of the North American freight market.
The Spiraling Impact on Trade and Tariff
A protectionist US administration may impose higher tariffs on Southeast Asian imports, particularly in textiles, electronics, and agriculture. This could hinder the competitiveness of these exports in the US market, notably affecting Vietnam, which has emerged as a manufacturing alternative to China.
In contrast, a US administration supporting multilateral trade agreements could enhance Southeast Asia's export opportunities. Rejoining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) would lower trade barriers, making Southeast Asian exports more competitive and diversifying their markets.
The US-China rivalry has also reshaped global trade, placing Southeast Asia at the forefront. ASEAN countries with strong ties to both nations must navigate these relationships carefully. If the US takes a firmer stance against China, Southeast Asia may feel pressure to align with one side, potentially disrupting supply chains in industries like semiconductors.
Nonetheless, opportunities may arise as US companies seek to diversify supply chains away from China, benefiting countries like Vietnam and Indonesia.
The Freight Impact – Then, Now, and Ahead
Freight Impact During the 2018 Trump Tariffs
In 2018, tariffs became a central feature of the Trump administration's trade strategy, focusing on Chinese imports. The government introduced tariffs on $200 billion worth of Chinese products, with an initial 10% tariff set for September and an increase to 25% scheduled for January 2019.
This led to a phenomenon called front-loading, where importers accelerated shipments to bring goods into the US before the tariffs took effect.
This rush created a spike in ocean freight demand, pushing container rates up. Data from that period showed shipping rates from Asia to the US. West Coast had doubled by mid-November 2018, reflecting the increased demand.
Source: Panjiva
In response to these tariffs, many companies stocked up on inventory in 2018, reducing their orders in 2019. This stockpiling impacted the flow of container shipments the following year, breaking a nine-year streak of annual growth in US container imports. As a result, freight rates during the traditional peak shipping season, typically from July to October, remained stable as much of the demand had already been met earlier.
Freight Impact in 2024 & Current Trends
In 2024, tariffs once again shaped freight trends. The Biden administration announced increased tariffs on $18 billion worth of Chinese goods, effective August. This led to another round of front-loading, as importers moved shipments earlier in the year to avoid the tariff hikes.
While these 2024 tariff increases were more limited in scope than 2018, they still contributed to higher ocean freight demand in Q2. Other factors, such as geopolitical tensions and supply chain uncertainties, also significantly pushed importers to expedite their orders.
Source: Tax Foundation
The Road Ahead
Should Donald Trump win the 2024 election, his proposed tariffs—more extensive than those in 2018—could lead to a dramatic shift in freight logistics. Trump's plan includes imposing 10% to 20% tariffs on most US imports and a 60% tariff on all Chinese goods.
These measures would likely trigger a massive import surge ahead of implementation as companies rush to bring goods into the US before the tariffs take effect.
Even the anticipation of such tariffs, combined with the election results, could prompt an early spike in demand for ocean freight. Importers might start moving shipments earlier to avoid the general election impact of the tariffs, leading to a surge in shipping activity and a potential increase in container rates.
If any other supply chain disruptions—such as geopolitical conflicts or labor disputes—are ongoing, these rates could rise from elevated levels.
While higher shipping costs would be temporary, the actual US president's impact on the economy would come from the long-term consequences of increased tariffs. These would raise costs for importers, potentially leading to higher consumer prices and reduced US export demand due to retaliatory tariffs from other countries.
