Expecting President-elect Donald J. Trump to make good on his promise to impose “America First” protectionist tariffs, especially on China, shippers are planning to massively front-load freight before the tariffs spike import costs.
This bodes well in the short term for logistics firms such as freight forwarders and carriers, as the volume boost will spur demand and limit capacity. However, there are longer-term concerns about the impact of another trade war, like in 2018, during Trump’s first term. On the plus side for logistics providers, there is the potential for lower fuel costs with increased domestic production and a reduced regulatory burden.
It’s worth noting that Trump’s call for 10%-20% tariffs on most imports, and 60%-100% tariffs on Chinese goods — whoa — will face some pushback from legislators, even if both houses of Congress end up under GOP control.
Here is a roundup of how the leadership change at 1600 Pennsylvania Ave. in Washington, D.C., is poised to impact freight and logistics.
Let the Front Loading Begin!
Lori Ann LaRocco, lead supply chain writer for CNBC, said her phone was blowing up on election night with messages from logistics executives. They told her they were already receiving calls from shippers to pull freight forward as a hedge against the cost of Trump tariffs, calling it “reminiscent of 2018.”
“As we all know, the more demand for that coveted box and vessel space will put pressure on capacity and drive up rates,” LaRocco wrote on her LinkedIn page.
Paul Brashier, vice president of global supply chain for ITS Logistics, told LaRocco that increased vessel and container demand will fuel higher rates for freight, trucking, and warehousing in the short term. Meanwhile, trucking stocks (north) and ocean carrier stocks (south) headed in opposite directions. Analysts explained the latter as investors' belief that higher tariffs would dampen ocean freight demand and volumes.
NRF Boosts End-of-Year, Full-Year Retail Import Figures
With the one-two punch of impending Trump tariffs and a potential dockworker strike at East and Gulf Coast ports, the National Retail Federation (NRF) and Hackett Associates have revised their full-year and end-of-year forecasts for retail import volume.
The latest Global Port Tracker report, released Nov. 8, projects a 13.6% increase in import volume for November to 2.15 million TEUs, compared to a 0.9% bump called for just a month ago, according to the Journal of Commerce (subscription required). The December forecast now calls for a 6.1% jump to 1.99 million TEUs, compared to the previous projection of just 0.2% growth.
Like many others, Jonathan Gold, NRF’s vice president for supply chain and customs policy, is hearing from shippers who plan to step up importing to defend against the impact of Trump tariffs. “Neither of these developments is good for retailers, their customers, or the economy,” Gold said, referring to impending tariffs and the threat of a strike.
Deregulation Stands To Benefit Logistics Industry
If Trump follows through on his campaign promise to roll back regulations, including emission standards enacted during the Biden administration, it will result in lower transportation costs, benefiting shippers and carriers.
The Clean Freight Coalition, a trucking industry trade group critical of strict environmental standards, estimates that full electrification of the domestic fleet — vehicles and charging infrastructure — would cost truckers and consumers $1 trillion.
While there are other ways to achieve compliance with the Biden EPA’s GHG phase 3 emission standards, a massive shift to EVs would certainly be the major component. For instance, GHG3 calls for 25% of new long-haul vehicles and 40% of new heavy-duty, short-haul, and medium-duty vehicles to be zero emission by 2032. All this will likely go away or at least be significantly dialed back under Trump, especially if Republicans control the House and the Senate; at press time, a few House races have yet to be decided. Breaking: Trump has named former New York GOP Rep. Lee Zeldin to head the EPA, giving him a strong deregulation mandate.
Trump Tariff Proposals Spark Heated Debate
With import tariffs front and center in the second Trump administration, economists, pundits, and politicians are lining up to debate the fiscal wisdom of the move even before they’re enacted. Trump thinks that higher tariffs will help offset the massive trade imbalance, incentivize more domestic manufacturing — including by foreign companies — and drive a premium for access to the world’s premier market. As of September, the U.S. trade deficit stood at $108.2 billion, up from $94.2 billion in August.
Opponents of the move say American consumers will be the real losers as companies boost retail prices to offset the cost of higher tariffs. At the same time, protectionism will spur retaliatory tariffs far and wide. The NRF released a study estimating the proposed Trump tariffs would cost consumers $46-$78 billion more annually across six categories: apparel, toys, furniture, household appliances, footwear, and travel goods.
Beyond the short-term impact of a deluge of imports ahead of tariff imposition, opponents believe they could act as a brake on logistics and transportation as imports slow in response. They also see the potential for higher production costs for domestic manufacturers who rely on imported materials, hurting their competitiveness and again leading to higher consumer prices.
On the other hand, Oren Cass argues in The Atlantic that opponents of tariffs ignore the many benefits of a boost in domestic manufacturing. These include more resilient, derisked supply chains, stronger national security from domestic defense production, greater innovation and productivity, and overall economic growth.
Buckle Up; This Transition Will Get Interesting
It’s hard to imagine a more stark contrast between the approach of the outgoing and incoming administrations. From trade, economics, and border security to foreign policy, Trump aims to shake things up in Washington once again. Armed with a mandate from the electorate and at least a Senate majority in hand, he’s already made a raft of major appointments awaiting confirmation.
With so much in flux, and experts divided on the long-term impact of tariffs on freight demand and supply chains, shippers need a solid partner who can help them navigate the coming weeks and months. Wicker Park Logistics, a woman-owned logistics company and WBENC Certified Business, has a team of specialists who provide reliable transportation services for leading firms in food & beverage, oil & gas, and more.
Leveraging deep industry expertise, a cloud-based platform, and a consultative approach, Wicker Park offers on-demand transportation across modes (FTL, LTL, flatbed,hot-shot, reefer, etc.) and end-to-end visibility into every shipment. To find out how Wicker Park Logistics can help meet your transportation needs in a disruptive time, get in touch for a quick quote.
