With Donald Trump winning Tuesday’s presidential election, retailers could soon be racing to import more product into the U.S. ahead of tariffs expected to be imposed by his incoming administration.
Jason Miller, interim chairperson, department of supply chain management at Michigan State University’s Eli Broad College of Business, said the uncertainty surrounding tariffs is “the biggest question for a pull forward of imports based on the election outcome.”
Retailers already front–loaded goods once in 2024, in the months ahead of the Oct. 1 East and Gulf Coast port strike. That escalation in imports was more related to the concerns of holiday product in U.S. warehouses, whereas this time, shippers would be more worried about potential costs incurred when the next administration enters the White House.
President-elect Trump has said he would impose universal tariffs of 10 percent to 20 percent on all U.S. imports, while goods from China would get slapped with a tariff ranging from 60 percent to as high as 100 percent. The anticipated duties have led analysts to surmise that container prices will escalate, thus potentially prompting retailers to bring in goods ahead of Inauguration Day on Jan. 20.
Shippers are mirroring decisions made during Trump’s first go-around as president, when he announced tariffs on $200 billion worth of Chinese goods in July 2018. This led shippers to pull forward ocean imports in a rush to bring in the goods ahead of the tariffs’ implementation.
Ocean import data from the National Retail Federation’s Global Port Tracker showed that 2019 broke a nine-year streak of annual import volume growth into the U.S. Inbound cargo volumes dropped from 21.8 million in 2018 to 21.6 million in 2019.
“You could see that in volumes, they were pulled forward to the previous year. You still had relatively strong volumes in 2019, but you saw some of that shift,” said Judah Levine, head of research, Freightos Group. “In terms of available capacity and behavior of rates, that would probably be something that we will see again.”
With Trump’s inauguration still two months away and no timetable set for any tariff implementation, Levine expects a more gradual uptick in freight rates than in 2019, when they doubled from roughly $1,300 to $2,600 per container from Asia to the U.S. during the peak shipping season.
Levine told WWD’s sister publication Sourcing Journal that the increase in short-term demand will lead to higher rates elsewhere in the supply chain.
“Importers will incur higher inventory costs or warehousing costs because they’re going to have to store higher levels of inventory than they otherwise would have,” Levine said. “It’s more of a financial calculation of ‘What are my costs going to be if I wait and have to pay these tariffs?’”
According to Miller, the biggest pull forward of consumer goods includes toys, exercise equipment and household appliances like stoves, since most of those goods are imported from China. For example, 87 percent of all containerized waterborne toys come from China, while 83 percent of stoves are imported from there, according to the U.S. Census Bureau’s USA Trade Online data tool.
In a LinkedIn post, Vespucci Maritime chief executive officer Lars Jensen said shippers will bring in more non-time-sensitive goods due to the uncertainty of the expected tariffs’ breadth and timing.
Jensen also pointed to the other compounding issues incentivizing retailers to bring in cargo earlier, noting that another port strike could occur just days ahead of Trump’s inauguration.
“The issue related to a potential strike on the U.S. East Coast from January 15 now has to be seen through the added question of whether or not a Trump administration would invoke Taft-Hartley and/or how they would engage with ILA and USMX to find an agreement,” Jensen said.
The combo of strike and inauguration, on top of the Lunar New Year on Jan. 29, further complicates matters.
“Typically, you wouldn’t see a Lunar New Year bump in demand until early January. You might see that push until mid-December, which is a little earlier than usual,” Levine said. Factoring in the ILA strike, “that could prove disruptive and also put a lot of pressure on rates. The next few weeks will be indicative of if we’re expecting progress before January 15 or not, and that might inform shipper behavior. If it looks like there isn’t a lot of progress, there really has to be a rush to get things in before that date.”
A recent analysis by Drewry said a Trump presidency would carry “more disruptive risk” to the container shipping market, notably since “such levies would ultimately be paid by U.S. consumers.”
Container shipping giants have publicly shared conflicting views on how the overall container market and some of its goals will be affected by a Trump victory.
Maersk CEO Vincent Clerc downplayed that the election result would cause a major shift in container market demand, instead focusing on consumer health and willingness to spend as the wider concern.
Bud Darr, an executive vice president for Mediterranean Shipping Company, expressed concerns that a second Trump term would pose challenges for the industry’s decarbonization efforts due to likely rollbacks to current climate legislation.
