Handling The Chaos of Trade Tariffs and Disruptions in a Post-Trump World
Added tariffs create trade friction, rarely bringing the supposed benefits to the target benefactors. How does this impact the ease of doing business, and how can technology help?
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Yikes, if there ever was a dull moment in the logistics ecosystem. Where do we start? The silhouette of a labor strike across the US East and Gulf Coast ports seems to strengthen with every passing day, as the ILA flatly refuses to budge from its position of zero automation in the port premises. As talks have fallen through with the USMX, this would most likely result in a strike on Jan. 15, five days before President-Elect Trump takes over the US administration.
While the strike would probably be short-lived, the ripples of its impact would last longer. Container liners are itching to see disruptions, as it would give them the pretext to increase spot rates — which, even after the recent GRIs, are still lower than their September highs across all major trade lanes. That said, nothing would be as consequential to the US consumer as much as the proposed trade tariffs could.
From the POV of the importers and retailers, such tariffs are nothing new as they have lived through it during Trump’s first term in the White House. Importers had to address the Section 301 tariffs when they were implemented, which made them familiar with what is currently included under the 301 tariff list, both by product and HTS code.
Plus, ‘Tariffs 2.0’ has been in the reckoning ever since Trump was chosen to run as the Republican candidate. In the past month since being elected, Trump has issued a myriad of tariff threats against different trade partners, so much so as calling ‘tariff’ the most beautiful word in the dictionary.
In the past month since being elected, Trump has issued a myriad of tariff threats against different trade partners, so much so as calling ‘tariff’ the most beautiful word in the dictionary.
The questions today are about what additional products might be added to that list and its ramifications — be it the retaliatory measures, protectionist actions, or even expansion of free trade agreements. “There are a lot of known unknowns today,” said Kevin Shoemaker, the VP of Sales and Customer Success at KlearNow. “We know there’ll be developments in tariffs and trade policies, but we don’t yet know the extent, scale, or implications of these changes.”
“For instance, if you’re a manufacturer making surgical needles, you just had your tariffs raised to 100%. Cases like this highlight the critical need for importers to first understand what’s currently on the list and assess what products they are sourcing from impacted markets,” he pointed out. And considering some of the biggest US importers are also some of the country’s largest exporters, trade tariffs will be a blanket weighing down on trade at large.
To this extent, it has become essential to explore alternative sourcing options. Companies like fashion accessory major Steve Madden and kitchen appliances firm Breville have announced shifting their supply chains wholly or partially away from China. Regardless, such decisions cannot be taken in haste. With the Trump administration anticipated to throw trade tariffs around fairly regularly, importers must have visibility into their trade data, allowing them to gain a complete picture of their present-day operations.
This would include details about the markets they do business, their sourcing locations, the products involved, the raw materials that impact the sourced products, the applicable HTS codes, and the duties they currently pay, amongst others. For a long time, visibility in logistics has been viewed from the lens of freight movement and seldom from the angle of supply chain strategy. A better understanding of such trade data will allow companies to instantly react to freshly announced tariffs, meandering their supply chains around potential disruptions, cost increases, and compliance challenges.
A better understanding of trade data will allow companies to instantly react to freshly announced tariffs, meandering their supply chains around potential disruptions, cost increases, and compliance challenges.
“By consolidating data across all trade lanes and shipments, companies are in a much better position to assess the potential impact of changes to trade policy. For example, if Product X is added to the Section 301 tariff list on Jan. 20, businesses privy to trade data can instantly analyze the new duty rate impacting total duty spend,” mentioned Shoemaker. “This clarity enables them to decide whether to absorb the added costs, pass them on to consumers, or move sourcing away from the market — a key issue that could significantly impact consumer prices.”
This is where much of the concern lies. Companies are preparing for potential changes by exploring alternative sourcing markets like Mexico, Vietnam, or Taiwan. The issue goes beyond just the tariffs — it’s also about the broader implications for relationships with other trading blocs, like Europe, where there was significant back-and-forth during Trump’s first term.
However, it is easier said than done to gain perspective into macro-economic trade challenges, layering it on existing trade data, and relaying insights down to the operational level. One of the primary challenges for SMBs is the lack of internal resources to keep up with the rapidly changing trade environment. This puts them at a significant disadvantage, forcing them to rely heavily on third parties like customs brokers or freight forwarders for critical information.
While larger organizations do have in-house trade teams, they are often relatively small. Trade compliance has historically not been an area where companies allocate substantial resources or build out large departments, leaving them somewhat constrained despite the company’s greater overall capabilities. Companies going through rounds of layoffs due to unsustainable operations are increasingly looking to automate processes as existing resources are stretched thin.
Multinational firms operating in dozens of markets have significantly more trade complexities to monitor and manage, from varying trade policies to compliance requirements across different jurisdictions. The overarching issue for many companies is the need to ‘do more with less,’ with this pressure driving top management to conversations around automation.
“Another issue plaguing operations is the lack of trade data. While companies largely understand the need for trade data, they lack a comprehensive system in place to capture it consistently,” said Shoemaker. “When people think of trade data, they typically think of supply chain visibility platforms. However, these platforms almost never track end-to-end freight flows as such data is either siloed, not captured, or scattered across multiple stakeholder systems.”
While companies largely understand the need for trade data, they lack a comprehensive system in place to capture it consistently
Besides this, there’s also the hassle of learning to use technology and adapt to new workflows, which can get challenging for an organization set in its ways. “The key is to run technology that is sophisticated in its workings, but easy to use without complex IT integrations. A solution like KlearNow, with its no-touch implementation, can come in handy here,” contended Shoemaker.
“At KlearNow, we capture all kinds of unstructured trade data across every single shipment. All that’s needed is for the company to email us the shipping documentation, which we digitize and structure, creating a centralized repository. This is something that GTM platforms, ERPs, and visibility platforms can’t fully deliver on. With all trade and shipment data consolidated, the company would know exactly how much they’re spending on import duties, including specific details on what is being shipped and from which market.”
Understanding trade at the level of HTS codes, quantity, and duties, allows companies to report and analyze trade flows easily. This information enables them to run ‘what-if’ scenarios, helping simulate different outcomes and assess various strategies. Ultimately, the name of the game is speed. For companies caught in the crosswires of trade tariffs and disruptions, the ability to quickly adapt and make informed decisions can mean the difference between thriving and surviving.
The Week in Snippets
Major ocean carriers are gearing up for potential turmoil on the North Europe-US trade lane. MSC will implement a $2,000-per-FEU "Emergency Operational Surcharge" from Jan. 18, citing network restructuring as it transitions out of the 2M Alliance with Maersk. Meanwhile, February brings new liner alliances, including MSC’s standalone operations and the Premier Alliance rollout. Maersk and other carriers are preparing contingency plans for potential disruptions.
With President-elect Trump poised to impose hefty tariffs on imports, the National Retail Federation predicts a surge in shipping activity through spring as businesses race to secure inventory. US manufacturers are stockpiling critical parts and materials like fiber-optic splitters, emulsifiers, and electrical components, prioritizing essential purchases to stay ahead of rising costs and ensure competitive pricing. While China remains a key supplier despite past tariffs, importers are diversifying their supply chains to reduce risk.
Container spot rates on trans-Pacific routes rose this week, with rates from Shanghai to Los Angeles jumping 26% to $4,499 per 40ft, driven by mid-December GRIs and preemptive front-loading ahead of a potential January ILA port strike. Rates to New York followed suit, rising 17% to $6,074 per 40ft. Asia-Europe trades saw quieter activity, with slight rate declines as annual contract negotiations shift into early 2025.
Platforms like Temu, Shein, TikTok Shop, and Amazon are competing fiercely for price-sensitive consumers this holiday season. While Temu and Shein attract shoppers with ultra-low prices, trust remains a hurdle — 86% of Americans trust Amazon, compared to just 6% trusting Temu. That said, this trend of cheap, mass-produced goods highlights a growing challenge for small businesses, which struggle to match the pricing and variety offered by these e-commerce giants.
Quotable
“If your package is delayed during the holidays, you can blame Amazon’s insatiable greed. We gave Amazon a clear deadline to come to the table and do right by our members. They ignored it.”
- Teamsters General President Sean O’Brien, while commenting on the strike by unionized Amazon workers in several states across the US.
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