As the 2024 United States election approaches, the global supply chain is once again in the spotlight. While supply chain dynamics have always been influenced by political decisions, the stakes are higher than ever. The U.S. election will directly impact trade policies, labor regulations, environmental initiatives, and economic stability, all of which play pivotal roles in shaping global supply chains. In this article, I’ll explore how the upcoming election might influence supply chains, the new challenges that have emerged since the last election, and what businesses can do to stay ahead.
The State of Supply Chains in 2024: A Complex Recovery
The global supply chain is still recovering from a series of disruptive events over the past few years. The COVID-19 pandemic, trade tensions with China, and Russia’s invasion of Ukraine have all contributed to shortages in key industries, rising shipping costs, and delays in production. Inflation, supply shortages, and labor market constraints continue to weigh heavily on businesses, forcing them to rethink their supply chain strategies.
Despite these challenges, companies have adapted by diversifying their suppliers, bringing production back to the country they are established, and embracing digital technologies to optimize their operations. However, the 2024 election adds a new layer of uncertainty that could further impact these supply chain decisions.
The Political Influence on Supply Chains
The outcome of the 2024 election will shape how businesses approach supply chain management. Depending on the policies enacted, industries reliant on global trade and domestic logistics could face new regulations, tariffs, and challenges.
Here are some key areas where political influence will be felt:
- Trade Policies: Under the Trump administration, protectionist policies and tariffs on China defined much of the supply chain landscape. The U.S. is implementing steep tariff hikes on Chinese imports starting September 27, 2024 (whitehouse.gov and reuters sources) , impacting sectors like electronics, textiles, and machinery. This shift aims to address trade imbalances and promote fair competition amid rising geopolitical tensions. Unlike previous temporary measures, this policy signals a long-term strategy for restructuring trade with China. Businesses relying on Chinese goods should reassess their supply chains, considering diversifying suppliers or reshoring to mitigate costs and disruptions. As companies face ongoing challenges from the pandemic, inflation, and changing consumer demand, understanding these tariffs will be vital for strategic planning and resilience.
- Labor Regulations: With Democrats typically supporting stronger labor protections and Republicans often pushing for deregulation, the outcome of the election will influence labor costs, unionization efforts, and working conditions, particularly in industries like manufacturing and logistics.
- Climate Change and Sustainability: Climate policy is set to play a more prominent role in the 2024 election than in previous cycles. A candidate pushing for aggressive climate legislation could impact transportation, production, and energy use, forcing businesses to adopt more sustainable but often more expensive practices.
- Potential Strike with the first one that might start Oct 1 already. As we approach September 30th, the end date of the current contract between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX), the risk of a strike at U.S. Eastern ports is increasing significantly. The ILA recently rejected the latest proposal from USMX, raising the likelihood that dockworkers may initiate a strike on October 1st. Such an action would have profound implications for supply chain operations, exacerbating existing disruptions. Given the current political climate and the ongoing U.S. election, the government’s response remains uncertain. However, there is potential for rapid intervention to resolve the situation. Companies like freight forwarder are ready to assist businesses in exploring alternatives, whether through West Coast ports or less affected Eastern harbors, to mitigate the impact of any potential strike.
The Role of Geopolitical Concerns
U.S. supply chains do not operate in isolation; they are shaped by global dynamics. U.S.-China relations, the ongoing conflict in Ukraine, and other geopolitical tensions have made global trade more unpredictable. The 2024 election will dictate how the U.S. navigates these tensions. A candidate who pushes for decoupling from China, for example, would likely accelerate the in-country production switch of supply chains, driving costs higher in the short term but potentially increasing stability over time.
Moreover, the risk of international conflicts or trade wars spilling into the logistics and production sectors cannot be ignored. If U.S. foreign policy takes a more aggressive stance post-election, businesses may face further disruptions in overseas manufacturing, especially in tech and automotive industries that rely on complex, global supply chains.
Key Differences Between the 2024 Election and Previous Elections
While every election presents new challenges, the 2024 election is unique in its context and stakes. Here’s what sets it apart from the 2020 election:
1. Post-Pandemic Adjustments: The 2020 election took place in the midst of the COVID-19 pandemic, which had weakened supply chains worldwide. By 2024, businesses have largely adapted to post-pandemic conditions, but the long-term changes are still being felt. Global supply chains are leaner and more resilient, but also more vulnerable to geopolitical shocks and inflationary pressures.
2. Inflation and Labor Shortages: Inflation is at the forefront of the political debate heading into 2024, driven by global energy crises, supply shortages, and wage increases. This is a new layer of complexity compared to 2020, when the focus was more on emergency relief and stimulus packages. Inflation is eroding profit margins, pushing businesses to increase prices, and affecting consumer demand.
3. Returning production stateside and Supply Chain Diversification: In 2020, supply chains were grappling with immediate pandemic disruptions. By 2024, many companies have taken long-term actions, such as moving production closer to home or diversifying suppliers. These moves have been costly, but they offer more protection against global shocks. The 2024 election could either support or prevent these efforts, depending on the trade policies and economic priorities of the next administration.
4. Climate Change Policy: Climate change is now a central topic in the political discourse, whereas in 2020, it was a secondary concern amid the pandemic. Sustainability efforts, decarbonization of supply chains, and green energy investments will likely be at the forefront of many candidates’ platforms, influencing how businesses approach manufacturing, logistics, and transportation.
Post-Election Supply Chain Scenarios
Here are a few scenarios of how the U.S. supply chain might evolve after the 2024 election:
• Protectionist Policies: If a protectionist candidate wins, tariffs could return, particularly on imports from China and other competitive manufacturing nations. This would increase costs for companies dependent on global suppliers, driving further reshoring of production to the U.S. or other countries.
• Pro-Trade Policies: A candidate advocating for stronger trade partnerships may lower tariffs and open up new global markets. This would benefit sectors relying on international trade, such as tech and automotive industries, while potentially lowering costs for consumers.
• Focus on Green Supply Chains: An administration prioritizing climate change initiatives might introduce stricter regulations on transportation emissions and encourage businesses to adopt more sustainable practices. These initiatives could drive innovation, but also increase costs as companies are forced to invest in cleaner technologies.
Preparing for the Future
To navigate these uncertain waters, businesses must prepare for all potential outcomes. Diversifying suppliers (To prioritized), investing in automation, improving supply chain visibility, increase transportation timeline and adopting sustainable practices are key strategies to stay resilient in a shifting political landscape. It’s also crucial to engage in scenario planning, analyzing how different election results could impact the supply chain and developing strategies to respond quickly.
The 2024 U.S. election represents a critical moment for supply chains worldwide. The political decisions made will influence trade, labor, environmental regulations, and economic stability, all of which are deeply connected to supply chain management. By understanding these dynamics and staying agile, businesses can better position themselves to thrive in an uncertain future. The stakes are high, and the companies that prepare now will be best suited to navigate whatever comes next.
Victoire Emilian
Sept 23, 2024