Global Supply Chain - Geopolitics Summary: Labor Strife, Trade Policy, War & Consumer Demand key factors shaping ocean freight costs
President-elect Trump has suggested a variety of new tariffs on imports; Associated Press, Factcheck.org • General Tariffs - 10% to 20% on all imports. • China-Specific Tariffs - 60% on goods from China. • Retaliatory Tariffs - enacted if other countries impose higher tariffs on U.S. exports; if a country places a high tariff on American goods, U.S. response would be an equivalent tariff on imports from that country. • Sector-Specific Tariffs - high tariffs on specific companies and sectors including a 200% tariff on John Deere exports if the company moves production to Mexico and a 100% tariff on Mexican-made goods. The likelihood of President-elect Trump's proposed new tariffs taking effect is a topic of significant debate. He has indicated that he plans to use executive authority to impose tariffs, much like he did during his first term. The U.S. Constitution grants Congress the power to impose tariffs and Congress has over time delegated some of this authority to the president, allowing for executive action in certain circumstances. Experts point to Trump’s belief in the effectiveness of tariffs, his pace of action during his first term and the fact that for 2025 and 2026 at least, he will be working with a Republican House and Senate, setting a scene that
suggests tariff actions may come early in the new administration. Other experts expect trade policy changes under Trump to be meaningful, but short of some of the more dramatic proposals being mentioned in the run up to the inauguration. CBS News, Associated Press, Goldman Sachs Ongoing attacks by Houthi rebels on container ships in the Red Sea are likely to continue affecting operations and freight rates in the first half of 2025 and beyond. Projections of when and how the Houthis will maintain their campaign of disruption associated with the war in Gaza, have not borne-out after more than 15 months of conflict and most shipping bound for the west has had to continue routing around the Cape of Good Hope, adding a week to 10 days to every voyage. Consensus among experts is that a sustainable solution will require international diplomatic efforts rather than solely relying on military interventions. Engaging the Houthi rebels in negotiations and addressing the underlying political issues in Yemen will be crucial, a process that will likely require years of sustained effort. Chartered Institute of Export and International Trade Working in favor of importers and consumers is expectation that the global shipping market will see an 8% increase in capacity but only a 3% increase in demand, easing some system constraints. FlexPort
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Q1 2025 Market Update
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