What will Trump's win mean for the logistics industry?18 November 2024
Donald Trump has already claimed victory in the US presidential election. But what will this mean for the US and global logistics industry? Ti’s CEO John Manners-Bell provides his immediate response to the result looking at some of Trump’s key policy commitments. Oil It is very likely that Trump will re-focus energy policy on the production of oil. Commentators are already talking about a $50 or even $40 barrel of oil resulting from a ‘drill, baby, drill!’ strategy. This will provide a significant boost for the domestic trucking market. In addition, it would reduce inflationary pressures, leading to a faster drop in the interest rate which could stimulate consumer demand. This will help not only domestic manufacturing, but also suck in imports from overseas. This would be positive for shipping, air cargo and international freight forwarding, although this will be countered by Trump’s plans for raising tariffs. Positive for domestic trucking, rail, intermodal, parcels, warehousing Tariffs One of Trump’s headline manifesto commitments has been the imposition of large tariffs on foreign imports, especially those originating from China. This is likely to result in more re-shoring to the USA, relocation of production (and warehousing) by Chinese manufacturers to the USA and near-sourcing of goods from Mexico, although these flows could also be targeted if Trump believes that Chinese manufacturers are subverting the USMCA trade agreement. Running contrary to the deflationary pressures of lower oil and less regulation, tariffs will push up prices for consumers and manufacturers. Europe will not be immune from these trade measures – relations during the last Trump presidency were very strained. If Europe retaliates by imposing its own trade measures this will affect transatlantic trades but also potentially support and protect European manufacturing and increase local logistics demand.
Automotive logistics The US automotive logistics industry will be a particular beneficiary, given that (it is likely) the transition to EVs in the US will be delayed. As we know, manufacturing ICE (internal combustion engine) rather than EVs, is far more logistics intensive. This raises the question, will the EU be able to hold the line on EV transition targets, especially as the European industry is struggling so badly? So, there may be knock on benefits for European auto logistics companies too. Taxation One of Trump’s headline policies is the reduction or abolition of many types of tax. These include corporation tax on domestic manufacturing including breaks for machinery, equipment, and research and development (R&D). The aim will be to create domestic growth and jobs.
Many businesses are looking forward to a reduction in levels of regulation following Trump’s commitment that for every new regulation he would abolish 10 existing ones. But Trump’s plans go much further. Elon Musk may be heading up an ‘efficiency commission’ and whole government departments may face abolition. The goal is to reduce the size of the state and reduce business cost, impacting positively on inflation and acting as a huge stimulus for the domestic economy.
Although many foreign governments and intergovernmental organisations see climate change policy as a priority, it is safe to say that Trump does not share this view. It is unconceivable that without support from the USA much progress will be made on global carbon emissions reduction agreements, potentially putting a brake on discussions at the International Maritime Organisation for a carbon tax. It should be remembered that Trump pulled out of the Paris Climate Agreement in 2017. The elimination of green energy subsidies in the Inflation Reduction Act (IRA) is also a probability. Trump’s energy policies will make the transition from diesel engine vehicles less achievable by reducing the cost of oil.
In his victory speech, Trump has vowed to ‘end wars’ rather than start them. What this means for Ukraine and the Middle East is unclear. Some sort of resolution will undoubtedly have an impact on oil and gas prices, pushing down global energy costs. Trump’s doubts over NATO may result in a larger spend on defence in Europe supporting logistics related to defence manufacturers based in the region. Conclusion The big winner from Trump’s election will be US trucking and other domestic logistics services. The likely losers will be international shipping, air and freight forwarders, although it must be pointed out that if there is strong US economic growth this will act as a growth driver. It must be expected that before tariffs are imposed there will be a major boom spike in imports to avoid extra costs and this will lead to an increase in shipping rates – for a short period at any rate. It is also unclear to what extent extra costs resulting from tariffs will negate many of the deflationary impacts of tax and regulation reduction. |
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