The impact of incoming tariffs on the supply chain is likely to vary from country to country

Trump has floated the idea of ​​imposing a tariff of 10% or more on all goods imported into the United States, a move he said would eliminate the trade deficit. But critics say it will lead to higher prices for American consumers and global economic instability. Tariffs are a drag on global trade, slowing the growth of exporters and putting pressure on the public finances of all parties involved. They are likely to increase inflation in the United States, forcing the Federal Reserve to act by tightening monetary policy.

The impact of import prices will have huge implications for supply chains and where and how manufacturers and retailers source their supplies. Consequently, logistics routes and trade routes will be affected. Firms largely pass on the cost of imports to customers, so tariffs are likely to be inflationary for U.S. buyers, forcing the Fed to keep interest rates high for longer or even reverse course and raise borrowing costs again.

Trump also said he should have the power to impose higher tariffs on countries that have imposed tariffs on U.S. imports. He has threatened to impose a 200 percent tariff on some imported cars, saying he is determined in particular to prevent cars from Mexico from entering the country. He also suggested that allies such as the European Union could see higher tariffs on their goods. But Trump has his sights set on China first. It proposes to phase out imports of Chinese goods such as electronics, steel and pharmaceuticals over four years. It seeks to ban Chinese companies from owning American real estate and infrastructure in the energy and technology sectors.

While countries like China and Mexico may be hit hardest by the Trump administration, other countries could benefit. Potential winners include Brazil, which could boost trade with China given Beijing replaced all U.S. soybean imports with Brazilian ones when trade tensions escalated during Trump’s first presidency.

US oil producers are hoping that under a Trump presidency there will be tighter regulation of oil production, which means an increase in the supply of oil and, as a result, lower prices. This would be great news for the logistics industry, which has been grappling with high fleet operating costs and low freight rates. But it’s not that simple. Trump has also promised to impose additional sanctions on Iranian and Venezuelan barrels, meaning the global market could become tighter, potentially driving up prices. At the same time, the increased likelihood of trade wars under Trump could slow global economic growth and slow oil demand.

Trump has vowed to restore his first-term policies against illegal border crossings and continue to impose sweeping new restrictions. He has vowed to restrict access to asylum at the U.S.-Mexico border and undertake the largest deportation effort in American history, a move likely to face legal challenges and resistance from Democrats in Congress. In light of an aging population, this could impact supply chains already under pressure from labor shortages and in need of immigration reforms.

When it comes to sustainability, the new administration will change course here too. Trump has made clear promises to pull the US out of the Paris climate accord again after the US re-entered the accord under President Joe Biden. While it’s a step backwards, replacing the EPA’s electric truck rules with national emissions standards may be a more realistic approach to trucking, especially in California.

While it will be months before the new administration takes office and the proposed changes are implemented, one thing is certain: we will see greater volatility in supply chains, creating an even greater need for companies to be prepared for the coming disruptions by becoming more agile and for industry organizations work closely with Capitol Hill.

Look for new articles from me every week at FreightWaves.com.

About the author

Bart De Munck is an industry leader with over 30 years of experience in the supply chain and logistics industry. He has worked for large international companies including EY, GE Capital, Penske Logistics and PepsiCo, as well as several technology companies. He also spent eight years as Research Vice President at Gartner and most recently served as Chief Industry Officer at project44. He is a member of the Forbes Technology Council and the CSCMP Inner Circle of Leadership.