By Kevin O’Marah, Co-Founder and Chief Research Officer, Zero100
While much of the media focuses on the more melodramatic aspects of the US presidential election campaign, supply chain planners already know that ripples will be felt across procurement from November 6, no matter which candidate wins.
With many of the decisive swing states still too close to call, and differing attitudes to tariffs among the candidates, it is going to pay to be prepared. But what does a Trump or a Harris win mean for your industry? And how do you separate the political theatre and hyperbole from the actuality, no matter where your allegiances may lie?
Former-President Trump’s intentions seem more predictable, but the results of their application are far from it. He has signalled his intention to impose a broad 10% tariff on all imported goods, with a 60% tariff on Chinese imports, both of which will have a far-reaching impact upon supply chains.
This could well lead to trade conflicts with China and the attendant price volatility this would prompt. Operations and supply chain leaders should see this as a cue to look towards both alternate supply chains and resilience by way of preparation. Time spent looking into alternative materials or sourcing is never wasted and could increase price efficiency regardless of which way the Electoral College swings. It’s also a task at which AI excels, with Trump’s policies acting as a nudge to explore these right now.
Vice-President Harris is expected to introduce more industry-targeted tariffs, which are almost certain to include increasing tariffs on EVs from 25 to 100% and ship-to-shore cranes from zero to 25%, with syringe and needle tariff rates rising from zero to 50%.
Overall, the initial supply chain impacts of a Harris presidency wouldn’t differ too much from that of a Trump victory, with the industry specific tariffs encouraging supply chain diversification and regionalisation equally. India and Vietnam are both areas that supply leaders should be investigating regardless, especially when it comes to technology, with Mexico and Colombia also growing in stature across the board. Diversifying your supply chains will also help cut down on shipping costs regardless who’s sworn in next January, especially when you can’t predict fuel prices, carbon taxes or tariffs.
Collaboration, automation and upskilling in these locales should be a long-term aim, with production sitting closer to end customers leading to decreased labour and shipping costs. It can also help with supply resilience if and when regional conflicts occur, whether as a result of US foreign policy or localised conflicts.
The cost of labour closer to home is also something to keep a keen eye on. A Harris win would likely prompt a rise in labour costs, with trade unions already flexing muscle in ways that will directly impact supply chains. We have an ongoing Boeing strike in Seattle, with port workers on the East Coast having secured an eye-watering five-year deal after their own walkout.
Harris is likely to be sympathetic to the likes of the UAW (United Automobile Workers), increasing the likelihood that other unions will also seek better terms. Neither candidate will want to see cut-price outsourcing, so we can expect labour costs to push up supply costs from within the US.
This uptick in union influence could well become part of a global trend, with trans-national solidarity already seen through the recent dock strikes. Union success and growth could have implications for supply chains internationally, from the factory floor to the shipping lanes.
Those who are happier to wait for the result before updating their plans can still act now to stay ahead of the game. Recent advances in AI and related automation tech dictate that investing in robotics and other automative machinery is never going to be a bad move. If you are already enroute to such investments, don’t stop now, and, if you haven’t, then what are you waiting for?
If Harris wins, the push for environmental accountability and renewable energy incentives is likely to continue, although even a Trump win, and subsequent abandonment of some green incentives, is unlikely to slow the move towards zero carbon chains globally. The EU and national governments will push their own initiatives, so awareness and a degree of compliance is more or less obligatory anyway, making visible environmental responsibility in your planning a sound investment regardless of the victor.
In short, readiness, resilience and a push for automation should get you through the period between the election and the next State of the Union address. In a year defined by political upheaval and back-to-back elections, the future can seem unpredictable, but supply chain leaders seldom go unprepared. We hope that things run smoothly but are always ready for shocks.
