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Freight feels the Trump Effect

[ November 6, 2024   //   ]

Judah Levine, head of research at the Freightos platform says that Donald Trump’s victory in the US presidential elections could have an effect on supply chains even before he takes office.

The president-to-be is known to be in favour of stiff tariffs on overseas imports, especially those from China and anticipation of these may lead importers to pull forward shipments, “creating a preemptive freight frenzy”, Levine explained.

Frontloading could cause freight rates to feel the heat as importers race to dodge the tariffs, similar to the experience of Trump’s previous tariffs on Chinese goods imposed when he was in office in 2018 and 2019.” 

The Biden Administration has already proposed excluding many Chinese imports from de minimis customs duties. “If Trump moves forward with something similar, it could be a major challenge to the surge of Chinese goods arriving by air via platforms like Shein and Temu,” Levine concluded.

Xeneta chief analyst, Peter Sand, also said: “Shipping is a global industry feeding on international trade, so another Trump Presidency is a step in the wrong direction. The knee-jerk reaction from US shippers will be to frontload imports before Trump is able to impose his new tariffs. Back in 2018, the tariff on Chinese imports was 25%, now it is increasing up to 100% so the incentive to frontload is even greater.

“If you have warehouse space and the goods to ship, frontloading imports is the simplest way to manage this risk in the short term – but it will bring its own problems. A sudden increase in demand on major trade lanes into the US when ocean supply chains are already under pressure due to disruption in the Red Sea will place upward pressure on freight rates.

“We saw the negative impact of tariffs during Trump’s first term in office in 2018 when ocean container shipping rates spiked 70%. Shippers will be fearing more of the same this time around.”

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