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The risks of President Trump’s trade policies

Jan 23, 2025 | , , , , , , , , , , , , , , , ,

President Donald Trump’s inauguration speech and subsequent executive orders have provided further insights into his proposed trade policies. 

His emphasis on protectionism, territorial expansion, and the establishment of an “External Revenue Service” marks a significant shift in the approach to international trade, raising concerns among stakeholders in global supply chains.

While intended to prioritise domestic economic growth, these policies could have far-reaching consequences for international trade, supply chains, and geopolitical stability.

In his inauguration speech, President Trump stated a commitment to reversing what he views as exploitative trade practices. Key elements of his vision include:

Tariffs and Revenue Generation: Trump announced the establishment of an “External Revenue Service” to manage tariffs, duties, and revenues, asserting that this would generate “massive amounts of money pouring into our treasury coming from foreign sources.” He also hinted at potential tariffs of 25% on imports from Mexico and Canada, with implementation possibly starting as early as February.

Territorial Expansion and Strategic Assets: In a surprising claim, Trump indicated intentions to “take back” the Panama Canal, erroneously stating that China operates it. He further noted ambitions to expand US territory, with implications for regions like Panama, Greenland, and Canada. These statements have added to geopolitical uncertainties.

Inflation Concerns: Despite his stated goal of reducing inflation, Trump’s emphasis on tariffs directly contradicts this aim. As economic experts have pointed out, tariffs tend to increase costs for businesses and consumers, creating inflationary pressures.

Implications for Global Trade and Supply Chains

Tariffs and Retaliation
The proposed tariffs, including the suggested 25% levies on Mexico and Canada, pose a risk of retaliation from trading partners. Such measures could disrupt the smooth flow of goods, increase trade barriers, and lead to a cycle of reciprocal tariffs. Industries like automotive, manufacturing, and electronics, which rely heavily on global supply chains, would be particularly affected.

These policies also threaten to undermine trade relationships between the US and its partners, creating uncertainty for businesses dependent on predictable supply chain operations.

Inflationary Impact
Trump’s claim that tariffs would enrich the US by taxing foreign countries misrepresents how tariffs function. In reality, these costs are borne by importers and ultimately passed on to consumers in the form of higher prices. This would likely lead to inflation, contradicting the administration’s stated goal of reducing costs and combating record inflation.

Geopolitical Tensions
Trump’s assertion regarding the Panama Canal and broader territorial ambitions increases geopolitical uncertainties. Control of key trade corridors like the Panama Canal is crucial for global shipping routes, and such rhetoric risks destabilising international relations. The suggestion of US territorial expansion further complicates trade dynamics, with potential repercussions for trade routes and global commerce.

Impacts on the UK and Europe
For the UK, the indirect effects of Trump’s policies are concerning. Europe, a key trading partner for the UK, may face economic disruptions due to strained US-EU trade relations. The UK’s automotive, machinery, and chemicals sectors, which rely on seamless integration with European supply chains, could experience higher costs, delays, and reduced demand.

Additionally, retaliatory measures by China and other US trading partners may flood global markets with cheaper goods, increasing competition for European industries and indirectly affecting UK exporters.

At Metro, we leverage award-winning services and deep market expertise to help businesses navigate the challenges posed by new tariffs, rising trade barriers, and supply chain disruptions. Whether it’s mitigating the impact of rising trade barriers, reconfiguring supply chains to address changing energy policies, or responding to broader global and UK economic developments, Metro provides tailored insights and solutions to ensure your success.

In times of uncertainty, preparation is key. With Metro as your trusted partner, you can adapt and thrive in this evolving landscape.

Contact Managing Director Andy Smith today to explore how we can safeguard your supply chain and help you navigate the complexities of 2025.

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USEC sea freight rates climb despite ILA strike resolution

Jan 23, 2025 | , , , , , , , , ,

The recent resolution of labour negotiations between the International Longshoremen’s Association (ILA) and the US Maritime Alliance has averted a potentially disruptive strike across US East Coast and Gulf Coast ports. However, the last-minute nature of the agreement has left shippers contending with elevated costs, strained supply chains, and lingering uncertainties.

In anticipation of a strike, shippers front-loaded cargo to avoid potential port closures, causing a short-term surge in import volumes. Retailers moved spring merchandise earlier than usual, and many shifted inbound flows to US West Coast ports or secondary supply sources. While these actions ensured inventory availability, they also lengthened transit times, strained port operations, and drove up transportation costs.

Even with the strike threat resolved, the backlog of elevated volumes will take time to normalise. Some ports are already reporting delays as they work through the excess cargo, further tightening capacity and extending delivery schedules. This logistical ripple effect is compounded by pre-Lunar New Year demand, which has spurred additional shipments and intensified pressure on the supply chain.

Rising costs and capacity constraints
The surge in front-loaded cargo has led to significant rate increases on the transpacific trade lane. Spot rates to the US East Coast rose sharply, with increases exceeding 25% since mid-December. This upward trend, driven by demand spikes and tighter capacity, is expected to persist as carriers announce new general rate increases (GRIs) of up to $3,000 per 40ft container in February.

Moreover, these measures are creating downstream financial impacts for businesses. Elevated inventory levels, longer transit times, and higher transportation costs are affecting margins and working capital, particularly for goods sourced from Asia. Export sectors, including refrigerated and hazardous freight, are also facing acute challenges due to capacity constraints and mitigation actions by carriers.

The overall capacity situation on the Asia–USWC lane tells a more complex story. Carriers have deployed 1.34 million TEU for the four-week CNY period, representing a sharp 33% year-on-year increase and the highest capacity level in recent years and far outpaces current demand increases, creating a risk of oversupply.

Currently, only 9% of capacity has been blanked for the CNY period, well below the 23% blanked in 2024 and the pre-pandemic average of 19%. Historically, carriers have announced significant additional blank sailings closer to CNY and this pattern may repeat in 2025, although uncertainties around the phase-in of new alliance networks may complicate the picture

Strike resolution provides relief, but challenges persist
While the strike resolution has provided relief, ongoing geopolitical and seasonal pressures continue to shape market dynamics. The Lunar New Year holiday, which falls on 29 January, has spurred a wave of early shipments, exacerbating capacity challenges on the transpacific trade lane. Simultaneously, uncertainty surrounding the incoming US administration’s potential tariff increases has added urgency to shipments, further intensifying demand.

Geopolitical risks, such as tensions in the Red Sea and concerns about a renewed US-China trade war, remain a wildcard that could destabilise global trade flows. These factors, combined with already elevated freight rates and tight capacity, are likely to keep shippers on edge in the coming months.

The resolution of the ILA strike may have averted immediate disruption, but the ripple effects of front-loaded cargo, capacity challenges, and elevated freight rates will continue to impact supply chains in the months ahead. Metro is here to help you manage these complexities, offering real-time insights and effective strategies to keep your goods moving efficiently and cost-effectively.

EMAIL Managing Director Andrew Smith today to discover how Metro can protect and future-proof your supply chain in North America and beyond. Let us help you build a resilient strategy for 2025 and navigate the challenges ahead with confidence.

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US ports avoid crisis with tentative ILA/USMX agreement

Jan 8, 2025 | , , , , , , , , ,

A potentially crippling strike across East and Gulf Coast ports, set to begin on 16th January 2025, has been averted with the announcement of a tentative six-year master contract agreement between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) on 8th January.

However, the agreement is not yet a done deal. It must be ratified by the ILA’s local wage-scale committees, leaving supply chains vulnerable to ongoing uncertainty that could stretch into the summer of 2025.

The roots of the dispute go back to October 2024, when dockworkers staged a three-day strike over issues of wages and automation. While the strike ended with an agreement on wage increases and a temporary extension of the existing contract, tensions simmered over automation, which the ILA argued could threaten jobs. Talks resumed on 7th January 2025 in New Jersey, culminating in an agreement just days before the strike deadline.

A pivotal moment in the negotiations came on 20th December 2024, when President-elect Donald Trump met with ILA President Harold Daggett in Florida. Trump expressed open support for the union’s anti-automation stance, stating that foreign-owned carriers should invest in American dockworkers rather than fully automated systems. His intervention reportedly added significant pressure on carriers, leading to a compromise in the tentative deal. The agreement allows for limited semi-automation while guaranteeing union jobs tied to new technologies.

Although the immediate strike threat has passed, the risk of disruption remains. The ratification process is expected to take months, and uncertainty will continue to impact supply chains.

Metro has implemented contingency measures to mitigate the impact of potential labour unrest. These include diverting cargo to West Coast ports, Canadian trans-loading and expanding air freight options. These solutions remain critical as the ratification process unfolds.

At the same time, we are urging carriers to lift surcharges such as “Work Disruption” and “Port Congestion” fees, which have added financial strain to supply chains since October 2024.

The threat of renewed disruption is likely to persist until the agreement is ratified. Metro strongly advises shippers to remain vigilant, flexible, and prepared to adapt their logistics strategies in the months ahead.

With uncertainties lingering, Metro’s proactive solutions are essential to maintaining a resilient and adaptable supply chain. Our expert team continuously monitors developments, offering strategic guidance to help you optimise routes, avoid disruption, and manage costs effectively.

EMAIL our Managing Director, Andrew Smith, to discover how Metro can protect and future-proof your North American supply chain.

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Freight market outlook 2025: Navigating uncertainty and change

Jan 8, 2025 | , , , , , , , , , , , , , , , ,

The freight industry faces a challenging 2025, with ongoing diversions around Africa, potential labour strikes, and looming tariff changes shaping the air and sea freight landscape. 

While best and worst-case scenarios could unfold, the most likely outcome lies somewhere in between, creating a complex and dynamic environment for shippers and carriers alike.

Red sea disruptions and capacity adjustments

Persistent attacks in the Red Sea continue to divert container traffic via the Cape of Good Hope, extending transit times and keeping freight rates elevated. Even if hostilities end, a lengthy adjustment period is likely as shipping lines reintroduce Red Sea routes.

With carriers set to phase in new networks in February and March, further changes to accommodate Suez transits may not occur before August. This transitional phase could temporarily worsen congestion and delays. However, once stabilised, the market would benefit from restored transit times and reduced rates.

The reintroduction of capacity also raises concerns about overcapacity. Carriers are actively working to mitigate this risk through measures like scrapping older vessels, reducing charter fleets, slow steaming, and blank sailings. While these steps may stabilise rates, their effectiveness will depend on demand levels throughout the year.

Labour strikes and tariff impacts

Despite agreement on outstanding issues on the 8th January, the threat of strikes at US East and Gulf coast ports has not entirely lifted. And while they are theoretically unlikely, they could remain a possibility until Summer 2025.

Tariffs, on the other hand, remain a critical factor. New US tariffs in 2025, particularly on Chinese imports and goods from Canada and Mexico, could drastically reshape trade flows. Anticipation of these tariffs has already led to front-loading, as shippers move goods early to avoid higher costs. This behaviour may disrupt seasonality, creating spikes in demand and rates before tariffs take effect, followed by lower volumes afterwards. Additionally, tariffs could encourage sourcing shifts to countries like Vietnam and India, further altering global trade dynamics.

Air freight under pressure

Air freight, driven by strong eCommerce demand from Asia, enjoyed robust growth in 2024, but 2025 presents significant headwinds. Potential changes to the US ‘de minimis’ thresholds could curb eCommerce shipments, while Trump’s proposed tariffs may disrupt transpacific flows further.

Capacity constraints, already a challenge, could ease slightly if eCommerce demand slows. This would benefit transatlantic shippers, who saw air cargo spot rates from Western Europe to the US double during the 2024 peak season. However, other pressures loom, including the EU’s ReFuelEU Sustainable Aviation Fuel (SAF) mandate, which took effect on 1st January 2025, requiring a minimum of 2% SAF at EU airports—raising airline costs.

A year of uncertainty

2025 will be a year of adjustment for the freight industry as carriers and shippers navigate geopolitical risks, evolving capacity challenges, and shifting trade policies.

In addition weather related issues as a result of global warming and other environmental impact need to be considered during certain months and seasons. Hurricanes, typhoons, flooding, fires, volcanic occurrences could all have an impact in certain regions at different times.

Shippers must prepare for fluctuating demand and rates, anticipate potential disruptions, and stay informed. Flexibility and proactive planning will be key to navigating the complexities of 2025 and ensuring long-term success.

For urgent and sensitive shipments, Metro offers tailored airfreight, charter, and sea/air solutions. With block space agreements (BSA) and capacity purchase agreements (CPA), to guarantee space and competitive rates on the busiest routes.

In a volatile sea freight market, our fixed-rate agreements on popular shipping routes reduce risk and provide essential budgetary certainty. 

To explore how Metro’s carrier agreements could optimise your supply chains and save you money in 2025, please EMAIL our Managing Director Andy Smith.

Category: United States

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