Despite my less frequent posts I have heard from some surprisingly persistent readers. They have each asked for my take on the Trump tariff proposals (here and here and here and here among many more).
Mr. Trump is not yet President. He is well-known for aggressive negotiation tactics. What is promised — threatened — often morphs to close a deal. So, any speculation by me regarding future tariff impacts on Supply Chain Resilience would be mostly noise. Anticipating the strategic threat certainly reinforces principles of capacity diversification and avoiding excess capacity concentration. This is true whether the threat is tariffs, typhoons, or terrorism…
That acknowledged, I will note that, first, many players are making forward-leaning procurements to receive imported products/components before Mr. Trump can act. December and first-half-January container numbers should be unusually strong. Second, supply chains prefer open, flexible, low-friction, high-confidence flows. Uncertainty and sudden impediments increase costs, time-expended, and — often — congestion. Where replacement products and channels exist, adaptation will happen — how long it will take and how costly is very tough to predict.
More later, though probably not before next month. But thanks for asking.
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I’m not the only one not talking. The International Longshoremen’s Association (ILA) is not talking to the US Maritime Alliance (operators of US East Coast and Gulf Coast ports). The current contract extension closes on January 15. The parties have agreed to a 61.5 percent pay increase over six years. But talks have broken down over potential automation (more and more and more). While also a matter of negotiations, this is a much more binary risk to Supply Chain Resilience than more morphable tariff threats.