Global Supply Chains on the Brink Again: Shipping Costs Set to Surge
Global central banks and businesses are bracing for the potential impacts of new tariffs. Just as supply chains were beginning to recover from the pandemic disruptions, they now face fresh strains from rising trade pressures.
At a furniture manufacturing plant in Hangzhou Skytech Outdoor, two hours west of Shanghai, Sunny Hu has been working tirelessly for nearly two months since the U.S. presidential election. Her priority: ensuring shipments reach American customers as quickly as possible while also scouting alternative markets to mitigate risks from new tariff policies.
Meanwhile, thousands of kilometers away in Germany’s renowned Riesling wine region, Matthias Arnold, a long-time winemaker, is racing against time. After receiving a surge in orders from U.S. partners, he is striving to finalize as many contracts as possible before the U.S. government reimposes tariffs on European wines—a policy first implemented by former President Donald Trump in 2019 and later suspended under President Joe Biden.
Across the globe, businesses are not waiting for Trump’s official inauguration to prepare for potential tariff changes. Each tariff threat has left companies scrambling for contingency plans, amid growing risks of trade disruption and bottlenecks. These uncertainties are hitting both businesses and consumers alike.
At JLab headquarters in California, CEO Win Cramer recalls how his company suffered severe losses in 2019 when their products became subject to Trump-era tariffs, and their exemption requests were denied. The situation forced JLab to relocate 90% of its production from China to Vietnam, Malaysia, and other countries. However, with new tariff risks looming, JLab is once again facing the prospect of raising prices on its wireless headphones and audio devices.
In a conversation with Bloomberg, Robert Krieger, Senior Director at logistics consulting firm Krieger Worldwide, warned:
“We are in a state of extreme tension. The global supply chain may be on the brink of another major disruption.”
Racing Against Time
Faced with mounting uncertainties, businesses worldwide are accelerating orders to secure supply chains. Others are seeking alternative suppliers or renegotiating contracts with existing partners.
A key challenge in global supply chains today is the rising cost burden—driven by excess inventories, soaring logistics expenses, and unverified suppliers. Businesses are warning of profit margin erosion, cost-cutting pressures, and higher prices ultimately being passed on to consumers.
However, even proactive strategies may not guarantee smooth operations. The lessons from the previous U.S.-China trade war may no longer apply in today’s evolving landscape.
In late November, Donald Trump threatened to impose additional tariffs of 10% on Chinese goods and 25% on all imports from Mexico and Canada. This policy shift signals that not only adversaries but even U.S. allies could face economic repercussions under his trade agenda.
At Zipfox, a U.S. platform connecting businesses with Mexican manufacturers, quote requests surged 30% in the weeks leading up to the election. CEO Raine Madhi noted that the figure skyrocketed further after Trump’s threat of imposing 100% tariffs on BRICS nations.
Data Reflecting Growing Strain on Supply Chains
As businesses rush to prepare, real-time economic indicators are beginning to show signs of strain, raising concerns for central banks monitoring inflationary pressures.
According to Bloomberg, container traffic at Chinese ports surged double digits in the two weeks following the U.S. election, reaching a 30% spike by mid-December.
Similarly, international air cargo volumes have climbed by at least 30% weekly since mid-October. Economists predict this trend will persist as businesses and consumers stockpile orders ahead of expected tariff hikes.
Across the Pacific, America’s two largest container ports—Los Angeles and Long Beach—are facing an import surge. Both ports broke volume records previously set during the COVID-19 supply chain crunch in Q3 2024. According to Long Beach Port CEO Mario Cordero, incoming shipments will remain elevated through spring 2025.
These concerns are reflected in the latest Federal Reserve Beige Book report, which mentioned “tariffs” 11 times—the highest count since 2020. This highlights how tariff risks have dominated economic discussions since the November election.
Bloomberg data also reveals that S&P 500 company executives referenced “tariffs” more frequently in December’s earnings reports than at any time since late 2019.
Meanwhile, EY global trade expert Lynlee Brown received over 400 emails from companies worldwide on the morning after the election alone, all seeking clarity on potential tariff implications—from U.S. importers to Australian textile firms.
Beyond tariffs, additional factors such as China’s Lunar New Year holiday and potential U.S. port labor strikes in early 2025 are further pressuring global supply chains.
Robert Sockin, an economist at Citigroup, warned:
“If early-ordering trends continue to spread, shipping costs could spike dramatically. This could cause congestion at U.S. ports, further straining global supply chains.”
As businesses brace for economic turbulence, the coming months will test the resilience of global trade networks—with potential ramifications for inflation, consumer prices, and financial markets worldwide.