A two-hour drive west of Shanghai, Sunny Hu has spent nearly two months since the U.S. election rushing shipments of his company’s outdoor furniture and pavilions to American customers and racing to diversify Hangzhou Skytech Outdoor Co. Ltd. into other markets. .
Meanwhile, in the heart of Germany’s Riesling belt, eighth-generation winemaker Matthias Arnold has been receiving an influx of special orders from American importers since Donald Trump’s victory. He is rushing to fill as many as possible before the president-elect can reinstate the taxes on European wines that he imposed in 2019 but that the Biden administration suspended.
Around the world, companies aren’t waiting until U.S. Inauguration Day, Jan. 20, to see what countries, products or tariff rates are announced in Trump’s widely telegraphed trade wars. The mere threat of their universal tariffs is sparking a revolt that is leaving the global trading system prone to bottlenecks, saddled with higher costs and vulnerable to disruption in the event of an economic shock.
“We are still in the panic period,” said Robert Krieger, president of Los Angeles-based customs brokerage and logistics advisory firm Krieger Worldwide.
“There is about to be a king tide in the supply chain.”
At California-based JLab, CEO Win Cramer had already moved its supply chains out of China to circumvent tariffs imposed during Trump’s first presidency. Along with a hiring freeze imposed until June amid uncertainty, its next step would be to increase prices on the company’s headphones and wireless products if a universal tariff is applied this time.
To get ahead of the game, some companies are pre-ordering. Others are looking for new suppliers or, if that’s not possible, renegotiating terms with existing ones. A common theme: renewed stress comes with higher costs, in the form of larger inventories, faster and more expensive shipping, or taking risks with unproven partners. Profits will be hit and expenses will be reduced elsewhere, they said. Ultimately, consumers will foot the bill.
The problem is that, despite all the preventative measures, there is no guarantee that the strategies that helped some companies weather Trump’s first trade war will work this time. As evidenced by Trump’s threat in late November to impose additional tariffs of 10% on goods from China and 25% on all goods from Mexico and Canada, both allies and adversaries are on point this time. looking.
Zipfox, an online product sourcing platform that links U.S.-based companies with factories primarily in Mexico, has seen a 30% increase in quote requests and new buyer signups since two weeks before the elections, according to founder and CEO Raine Mahdi, who said Inquiries spiked again after Trump threatened to impose 100% tariffs on BRICS countries. Most of them come from importers of goods made in China. Mahdi warns against complacency.
“If you wait too long, you’ll find yourself trying to transition in a pinch,” Mahdi said. “This time we are not catching the end of the Trump administration, but the whole thing and with a new anger.”
Business leaders’ survival instincts are already starting to show up in high-frequency data, and central bankers are watching closely given the threat higher import taxes pose to their fights against inflation.
China’s ports saw double-digit growth in container throughput in the two weeks around the election and that increased further to a nearly 30% increase in the second week of December. International air cargo flights have increased by at least a third each week since mid-October and economists expect that to continue as customers rush to advance orders.
Read more: https://www.bloomberg.com/news/features/2024-12-26/trump-tariffs-how-importers-shippers-worldwide-are-preparing?cmpid=BBD0 11425_TRADE&utm_medium=email&utm_source=newsletter&utm_term=250114&utm_campaign=trade&sref=DPtqrPAJ&embedded-checkout=true
