Trump’s Tariff Strategy and its Impact on Global Trade
Tariff Scare
Donald Trump’s second term as president of the United States, which began on January 20th, has already sparked concerns over trade, with a potential surge in tariffs on imports.
Last November, President Trump told Bloomberg News editor-in-chief John Micklethwait that “tariffs” is his favourite word in the English dictionary.
While Trump’s focus on tariffs may bolster domestic production in the U.S., it raises questions about the broader economic consequences.
Universal tariffs will likely reshape global trade dynamics, increasing uncertainty and impacting industries, particularly freight forwarding.
Although Trump has yet to vocalise issues with Australia specifically, the threats he’s shot at countries including Denmark, Canada, China, Columbia, Mexico and Panama have certainly imposed a lingering feeling of uncertainty within the industry.
Uncertainty
The uncertainty currently felt within the business of global trade replicates the uncertainty felt back in 2020 when China implemented numerous restrictions on Australian goods.
Although many of these restrictions on imports were lifted, it proved the volatility of the Chinese market, which left many Australian business owners feeling cautiously optimistic about re-entering the market.
What largely concerns international trade is Trump’s vision to roll out universal tariffs on all U.S. imports. Trump’s Treasury Secretary Scott Bessent is pushing for a 2.5 per cent tariff rate, increasing each month.
Senior supply chain management lecturer Medo Pournader from The University of Melbourne believes that, following these tariff hikes, some industries will feel more pressure than others.
Mrs Pournader said, “Australian beef and meat products, wine, machinery, pharmaceuticals, aluminium, minerals and ores,” will be most affected.
Additionally, tariffs may increase manufacturing costs globally, potentially leading some international economies to economically decline.
Assistant professor of econometrics and statistics at the Melbourne Business School, Dr James Cross, warned Forbes Australia that the implementation of these policies would influence everything from the cost of Chinese-manufactured goods to the price of agricultural exports.
Not only will this impact numerous industries, freight forwarding included, but universal tariffs have the potential to further increase Australia’s rate of inflation.
That said, uncertainty in the market could have some immediate benefits, as according to the head of Ocean and Overload Transportation at PSA BDP, Andrew McLoone, demand for ocean cargo is anticipated to increase in the short term, as U.S. importers want to front-load as much inventory as possible before tariffs are put in place.
Supply chain resilience
The January 17 meeting held by the WTO Committee on Market Access delved into crucial themes around supply chain resilience, focusing on tools for improving trade negotiations, enhancing cooperation between nations and strengthening global supply chain connectivity in the face of disruptions.
Events such as the COVID-19 pandemic and the Red Sea Crisis disrupted the global supply chain, which not only proved how important a strong supply chain is but also proved the importance of cooperation between countries and international organisations.
In fact, the moderator of the session Iain Fifer, went as far as to say that in the face of natural disasters and geopolitical tensions, no country can effectively address supply chain issues alone.
The Committee shared thoughts and ideas about potential actions that could be taken to strengthen operations throughout the supply chain, covering themes including trade liberalisation, regional agreements, sustainability efforts, geopolitical factors and changes in customs procedures.
Streamlining trade negotiations
The United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) drew discussions on the Trade Intelligence and Negotiation Adviser (TINA).
TINA was developed in 2021 to help negotiate trade agreements by providing insights into current tariffs, non-tariff measures (NTMs), agreements, and bilateral trade flows.
According to UNESCAP, TINA could reduce analysis time from “weeks to minutes”, allowing freight forwarders to better navigate policy changes that could impact logistics strategies.
Supply chain connectivity
China mentioned the 2024 Global Supply Chain Promotion Report, the Global Supply Chain Promotion Index (GSCPI) and the Global Supply Chain Connectivity Index (GSCCI).
These tools not only assist in the tracking of global supply chain trends and the status quo of global supply chain connectivity, but they also provide context about the foundations behind the trends and changes, which freight forwarders can use to better predict the future stability and development of supply chains.
Open supply chains
Brazil and Singapore raised the importance of retaining friendly multilateral communication during world events. The nations stressed the vitality of essential goods during crises, emphasising the significant role open supply chains played in providing food and medical supplies during the pandemic.
The United States also chimed in on the importance of harmonious multilateral communication, describing how effective communication bolsters supply chain resilience.
Significantly, The States also mentioned how their policy papers have been more sustainability-orientated, focusing more on security, diversity, and transparency.
These focus points have been incorporated into its recent supply chain resilience strategies, highlighting collaboration with multilateral organisations like the Organisation for Economic Cooperation and Development (OECD) and the Asia-Pacific Economic Cooperation (APEC).
This was the fourth and final discussion in a series of thematic sessions about supply chain resilience. Previous sessions focused on defining supply chain resilience, sharing domestic experiences and discussing data-driven assessments of critical supply chains.
Sea Freight Update
The Lunar New Year in 2025, also known as the Chinese New Year or the Spring Festival, is an important celebration in East and Southeast Asian cultures, including Chinese, Vietnamese, Korean, and other communities.
This event marks the end of the previous year and the beginning of the new year, providing an opportunity to observe traditions, gather with family and engage in elaborate feasting.
It’s important to understand that this celebration lasts more than just one day, which can create challenges for importers and exporters. The extended holiday period often leads to limited operations, labour shortages and shipping delays. In 2025, the Lunar New Year will be celebrated on January 29, which is earlier than in recent years.
As a result, it is expected that the workforce will return to regular duties by February 4. During the festivities, many factories, ports and shipping companies may operate under restrictions.
Consequently, these factors can lead to supply chain disruptions, characterized by increased shipment volumes, limited capacity, rising costs for both importers and exporters, workforce shortages causing delivery delays and reduced customer service availability.
The long holiday, coupled with other geopolitical factors, has contributed to increasing volatility in the ocean freight market. Rate restoration plans to raise freight rates by USD 500 per TEU, which were announced by major carriers last month to take effect in early January 2025, have not been successful. Instead, all shipping lines have unexpectedly decided to dramatically lower their rates, effective January 25, 2025.
The focus on maximizing vessel utilization by shipping lines has led to aggressive promotions on freight rates, particularly aimed at attracting additional cargo for vessels departing one week before and during the holiday period.
Shipping lines typically distribute the containers that have been checked into terminals before the holidays across two to three vessels scheduled to depart between January 25 and February 14.
This approach ensures an even spread of cargo bookings to fill their ships effectively.
This year, the task is more challenging due to the earlier occurrence of the long Lunar New Year holiday.
Additionally, some major shipping lines have scheduled blank sailings during this holiday period, which will complicate matters further.
As a result, shipping lines may adjust their freight rates based on their own objectives and available capacity.
Our dedicated team of experts are ready to support you in navigating these challenging times.
We are committed to aligning our sailing schedules and competitive pricing with your supply chain needs, ensuring that you have the best possible solutions at your disposal.
NSW Ports announces On-Dock Rail Investment Program at Port Botany
The NSW Ports this week announced its stage 2 program that will see investment of a new rail terminal at
DP World Port Botany.
It will include additional 600 metre rail siding serviced by rail mounted gantry cranes which is promised to boost rail handling capacity at the terminal to a throughput of 1 million TEU per annum.
Due to commence in June 2025, it is due for completion sometime in 2027 and will contribute to more efficiencies and cost-effective movements in and out of the terminal.
Industrial Action – QUBE
Earlier this month the Maritime Union of Australia announced ongoing protracted industrial action at QUBE Ports nationally. Unlike previous disputes which effected DP World container terminals, the dispute with QUBE affected bulk (non-containerised) commodities which are located in Darwin, Fremantle, Adelaide, Brisbane , Melbourne and Port Kembla NSW.
The dispute was centred around an existing Enterprise Agreement which expired on the 30th June 2024 and has been in negotiation since.
Thankfully the dispute has now been resolved, however with Enterprise Agreements expiring with the other container ports around the country, we may still see further disruptions at our main ports in the coming months.
HARDERS Contract Logistics gears up for Horsley Park, NSW site
go-live:
We are happy to share that Brett Myers has joined HARDERS in the capacity of Site Manager, at Horsley Park, our first contract logistics / 3PL site in NSW.
Brett has over three decades of warehousing and distribution leadership experience across the 3PL, Retail and Coldchain sectors.
He has well and truly hit the ground running, being busied with site
go-live preparations and building out the team.
The 8,500-pallet position site goes live in February 2025, which builds on the success of our first contract logistics site in Truganina, VIC which went live early 2024.
The warehouse management system is Blue Yonder, the tier-1, best-of-breed WMS also supporting our Truganina, VIC site operations.
HARDERS takes a compliance-first approach to safety and quality, and that is why we have commenced our various site certifications and accreditations already, which we will communicate as we move forward.
Feel free to reach out to your HARDERS representative for more information and a site visit.
Air Freight Update
Air cargo demand for 2024 exceeded the record volumes set in 2021 by 0.5%, helped by high e-commerce volumes and ocean shipping constraints.
International routes experienced exceptional traffic levels for the 17th consecutive month with a 7% year-on-year increase in December.
Air freight rates remained elevated in January despite a seasonal dip in pricing following the peak Christmas period. E-commerce remains a key driver of air cargo capacity utilization, with high load factors projected for 2025.
Whatever your cargo size, type, or deadline, we deliver the best rate and service combinations to meet your needs.
We have weekly consoles from USA, Europe, China, and South Africa into AU. Please contact our team of supply chain professionals who will continue to provide you with the most competitive options to support your supply chain needs.
Illegal Logging Legislative Reform
The Australian Government is committed to ensuring illegally logged material is not incorporated into Australian wood products. From 3 March 2025, legislative reform will enter into effect, providing government, industry and end users greater confidence in the source and supply of timber.
The new legal requirements under these reforms will involve changes to the internal processes of importers of timber and timber products. For the first six months of the new rules being in effect, the Department of Agriculture will continue to conduct audits as usual but will focus on education and guidance where non-compliance is detected relating to the new due diligence requirements. By early September, all importers should have transitioned to the new arrangements to prevent any compliance action being taken by the department in case of audit detections.
The advice from the department is that importers should begin preparing for these updates now to ensure compliance when the changes are implemented. Importers are required to understand their responsibilities for the products captured under the illegal logging laws. The importer’s due diligence should include a written due diligence system, information gathering, risk assessment, risk mitigation and record keeping. The following link provides further guidance for importers: Importers Resource – Illegal Logging.
The new framework will have two distinct risk assessment pathways. One for certified timber and timber products/raw logs, and a second for non-certified timber and timber/products raw logs.
The new measures will include a new repeat due diligence exception, which allows the importer to rely on a previous risk assessment and risk mitigation measures if they import the same products from the same supplier within a 12-month period. There will also be a future requirement to provide notice to the department before importing. The reforms also include the use of timber testing technologies to verify product claims related to species and/or origin.
Further information of these reforms will be provided once the systems are operational, and the implementation plan is finalised. Please contact HARDERS Advisory with any questions.
Outbreak of Foot and Mouth Disease in Germany
On 10 January 2025, the World Organisation for Animal Health reported a confirmed case of foot and mouth disease (FMD) in Germany, the first occurrence in almost 40 years.
The Department of Agriculture, Fisheries and Forestry (DAFF) has been working to assess the biosecurity risk to Australia and what this means for import conditions for the following commodities:
- Dairy that is sourced, manufactured or exported from Germany.
- Personal dairy and beef food items imported as passenger personal effects or through the mail into Australia from Germany.
- Reproductive material derived from cattle, sheep, goats, zoo bovids, giraffe or elephants sourced or exported from Germany.
- Veterinary therapeutics containing or derived from bovine, porcine, ovine, caprine, cervine or camelid materials sourced, manufactured or exported from Germany.
- Pet food and stock feed containing or derived from bovine, porcine, ovine, caprine, cervine or camelid materials sourced, manufactured or exported from Germany.
- Laboratory goods containing bovine, porcine, ovine, caprine, cervine and camelid fluids and tissues (including but not limited to test kits, animal fluids and tissues, culture media, foetal bovine serum, environmental samples and other laboratory materials) sourced, manufactured or exported from Germany.
- Peat moss sourced or exported from Germany.
To mitigate the risk to Australia, Germany has been removed from the list of FMD-free countries effective 14 November 2024.
DAFF should have, by now, contacted any permit holders or permit applicants impacted by this outbreak to advise of any potential changes to import conditions that may be required to protect Australia’s livestock industry. Varied import permits would follow to include any new import conditions.
If you have not yet heard from the department, it is recommended that you contact them at imports@aff.gov.au.
If you would like further information regarding the above, please contact HARDERS Advisory.