Exporters from China, Canada and Mexico are seeking to front-load shipments to the US after president-elect Donald Trump pledged to impose new levies on goods from the three countries on his first day in office.
At a giant supply chain expo in Beijing last week, logistics company representatives said the number of customers asking about bringing forward shipments had increased following Trump’s threat to impose an extra 10 per cent tariff on Chinese goods.
“We have received a lot of inquiries,” said Mao Ping, director of operations at Hunan-based logistics company Haotong Group, citing in particular the two days after Trump posted his tariff statements on his Truth Social account on November 25.
Zhang Junkai, a representative at Nissin-Sinotrans International Logistics, said there had been “an increase in the scale” of client consultations. Customers hoped their goods would be “shipped over before the end of the year and before Trump takes office”, Zhang said.
Sri Laxmana, vice-president for the Americas at CH Robinson, said that in the 24 hours after Trump posted that he would impose 25 per cent tariffs on all goods from Mexico and Canada, the logistics group had been pulled into “countless” meetings with clients.
“Some shippers were already front-loading freight ahead of a possible second US port strike and potential increase in tariffs on Chinese-imported goods,” said Laxmana. “Now, we can add a potential increase in Mexico and Canada-imported goods to the list of reasons shippers are exploring moving up their freight timelines.”
Signs of front-loading were already emerging just days after Trump won the US presidential election last month. During the campaign, Trump threatened tariffs of 60 per cent on goods from China — which he blames for the US trade deficit — and up to 20 per cent from all other countries.
Trump’s threatened extra tariffs against the US’s three most important trading partners came as he railed against their inability to stop illegal drugs and migrants from entering the US.
“The announcement is more reminiscent of the first Trump administration, when such tariffs were announced as a negotiating tactic,” Goldman Sachs said in an analyst note.
At the China International Supply Chain Expo in Beijing, representatives from two large shipping lines said clients had begun to front-load their exports even before Trump’s latest threats.
The president-elect’s pledge of an extra 10 per cent tariff had just added to the uncertainty, said one representative of a China-based shipping line.
“Clients are all saying that we need to rush to ship as much cargo as possible to the United States before Trump enters the White House on January 20,” he said.
Another representative said the front-loading trend had not been reflected in higher freight rates, however, partly because of an increase in new vessel capacity across the industry.
China’s exports rose 12.7 per cent year-on-year in October, the quickest pace in more than two years, but some economists questioned how much front-loading there was that month in shipments to the US, which saw its trade deficit shrink on lower imports.
Others said the ratio of inventory to sales had been falling for US wholesalers and for retailers returning to trend.
“There’s been some front-loading but I think it’s not something that we are actually seeing manifest itself in higher inventories,” said one executive with a global shipping line.
Asked about their clients’ intentions even before Trump’s promise to act on “day one”, many logistics executives said they had been making plans to beat any new levies.
“We will see extreme pre-ordering. [Traders] will get as much out of China as they can . . . It will definitely get very chaotic,” said a logistics executive at a global freight forwarder.
Mark Young, who runs shipping company Cetus Maritime, said Trump’s victory was making people rethink longer-term freight plans.
“We sometimes have [commitments for] 12 shipments in the coming 12 months, every month one shipment,” Young said. But he said a broker had told him people were “much more hesitant to place orders like that now”.
Some exporters were simply trying to figure out timing, said Mike Short, president of global forwarding at CH Robinson. “One customer asked about the last day their freight could leave Asia and arrive in the US before the new tariffs potentially take effect.”
Signs of front-loading are evident in US ports. The Port of Los Angeles moved 905,000 shipping containers in October, up 25 per cent from a year ago, said Gene Seroka, port executive director.
“Some shippers are front-loading cargo as a precaution against potential new tariffs,” he said, but added that other factors, including labour issues at ports in the Gulf of Mexico and on the US east coast, also contributed.
Simon Heaney, senior manager of container research at maritime consultancy Drewry, predicted transpacific ocean freight spot prices would “escalate sharply due to [a] front-loading demand surge” as more details of Trump’s tariff schedule emerges.
Chinese manufacturers have also begun exploring new markets and centres for production.
A Guangdong-based electronics group that supplies components to US home appliance makers said it was considering Morocco as an alternative overseas production base. The company had shelved its plan to expand production lines in Mexico, anticipating that Trump would “close the nearshoring loophole exploited by Chinese companies there”, an executive said.
Fred Neumann, chief Asia economist at HSBC, said exporters would have some time to consider their options as most of Trump’s tariff increases would probably only come into effect in the second half of next year because of legal procedures.
“The most likely approach is a staggered process,” Neumann said.
CH Robinson’s Laxmana said the timing of any tariff increases was “the number one question”.
“It typically takes months for full implementation of tariffs using administrative action . . . so a January launch would be rare,” he said, but cautioned that issues such as border controls were a priority for Trump and so his administration might act more quickly.
At the supply chain expo in Beijing there was an air of resignation about any coming tariff war.
A salesperson at one company that supplies companies producing components for Apple’s iPhones reflected a common view in Beijing that Trump’s tariffs plan would hurt US consumers almost as much as China.
“There is an ancient Chinese saying: Kill 1,000 enemy soldiers but lose 800 of your own,” the salesperson said.
Reporting by Joe Leahy, Tina Hu and Wenjie Ding in Beijing, Chan Ho-him, Gloria Li and Haohsiang Ko in Hong Kong, Thomas Hale in Shanghai, William Langley in Guangzhou, Oliver Telling in London, Owen Walker in Singapore and Christopher Grimes in Los Angeles
Data visualisation by Janina Conboye and Amy Borrett
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