The election of Donald Trump has seen companies scrambling to predict the impact his presidency will have on their business. With global trade a key policy in the election campaign, the logistics industry is bracing for a shake up, and Australian logistics is not immune. It is too early to know if Trump’s campaign policies will be implemented, but we do know that a Trump Presidency has the potential to severely impact the Australian Logistics market.
Firstly, Trump’s election campaign was heavily anti-trade and anti-globalisation with extensive protectionism economics. He has promised to withdraw the US from a number of trade agreements, such as the Trans-Pacific Partnership (TPP), as well as impose punitive tariff increases, such as a 45% tariff on Chinese imports.
Globally trade volumes have rapidly increased in the past 50 years, driven by lower trading barriers, and increased globalisation. If Trump implements these policies, we will likely see a trade war develop between China and the US. This will result in shrinking global trade volumes as countries minimise their overseas sourcing, severely impacting shipping. With ship operators facing the worst down cycle in 30 years, it could not come at a worse time.
Closer to home, how could that impact Australia? As Tim Harcout from the University of NSW Business School economics stated, "The damage he would do by a trade war with China would be immeasurable". US Government figures estimate trade between the US and China will top $416 billion in 2016. In Australia, China is our largest export market, taking one in every three shipments we send. Any impact to what goods China sells to the US would absolutely impact what we export to China.
However, it is not all doom and gloom for transport in Australia. Globally, with Brexit and now Trump, there is a shift to protectionism and anti-globalisation. This in turn, will drive companies to pursue local manufacturing, and improvements in technology efficiencies. We are likely to see an increase in domestic freight as companies look to use local manufacturers rather than overseas ones. We are also likely to see more Asia Pacific trade agreements taking shape, with China the driving force as opposed to the US. We can expect an increase in our trade with our Asia Pacific neighbours as we, and they, look to reduce reliance on a more protectionist, inward facing US.