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What you need to know
- This fall, retailers flooded the ports with more merchandise in preparation for disruptions that are expected to occur at the beginning of the year.
- Donald Trump, the new president-elect, has warned that he will increase tariffs on imported goods. This would result in a price hike.
- A looming longshoremen's strike in January could shut down ports and make bringing products into the country even harder.
The retailers are stocking up their shelves with merchandise imported from abroad, in order to beat tariffs or a possible dockworker strike.
That's according to the National Retail Federation (NRF) and Hackett Associates, which released a report Monday showing a surge in traffic in U.S. ports, especially on the West Coast. The volume of merchandise brought in at U.S. seaports was up 9% in October from the year before and up 29% over the year at Los Angeles-Long Beach, the nation's largest port complex. Hackett believes the increase will continue until the end of this year.
The advocacy group and consulting firm stated that retailers may try to stock up to prepare for potential disruptions in the coming year.
A temporary contract, signed by an important dockworkers’ union with the companies operating the ports, is scheduled to expire on January 15, renewing the threat that a strike could be called, as it was in the fall, when ports shut from New England down to Texas.
On Jan. 20th, Donald Trump is sworn back in as President. He has also promised to increase import taxes to make it more expensive to get goods into the United States. Trump promised to impose new tariffs upon Mexico, Canada, China and the United States on his very first day.
“It is not clear whether this will actually take effect immediately or whether it will take time to implement the tariffs, but shippers are moving up as much cargo as the can before then,” Ben Hackett the founder and CEO of the firm, wrote about Global Port Tracker in his report.
Tariff Threat
The question that importers, as well as consumers, who purchase products manufactured overseas, must ask is whether Trump’s threat of raising tariffs to Canada, Mexico, or China, was just a negotiating tactic, or if it will become reality.
Trump’s choices for financial key roles within his administration paint a picture of mixed results. The financial markets praised his choice of Scott Bessent to be Treasury Secretary, which is the highest economic position, as they viewed him as being a moderate on tariffs. However, other picks, including Howard Lutnick as commerce secretary and Peter Navarro as trade negotiator, point in the opposite direction.
Economists say that tariffs will drive prices up for all types of consumer products. The NRF, for example estimates that Trump’s policies will push up the price of an $40 toaster from $48 to $52.
Strike two
The other major threat, the union strike, hinges on a dispute between the International Longshoremen's Association and the United States Maritime Alliance, which represents ports and shipping lines.
Unions oppose port operators' plans to automate more processes, including installing new types of cranes. Owners claim that the improvements will increase port efficiency, but the union claims they’ll cost them jobs.
Hackett did not see many signs that the two parties would be able to reach an agreement before a strike.
"The threat of a work stoppage in mid-January looks greater than ever," he said.
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