Industry Update: Trade, Tariffs, and Freight Trends Shaping Global Commerce

Retailers Encourage Consumers to ‘Shop Now’ Before Trump Tariffs

Some retailers are encouraging American shoppers to shop ahead of expected import duties on a range of products which are expected to hike up prices.

Already, incoming President Donald Trump has vowed to implement tariffs of up to 25pc of goods entering from Canada and Mexico while implementing a separate 10pc levy on goods entering from China.

While it is not clear which goods specifically will be impacted retailers may be using the looming threat of duty imposition to encourage shoppers to buy products.

Managing Director and Retail Analyst of GlobalData Neil Saunders Neil Saunders described the move as “a double-edged sword” but could also have the effect of increasing demand for scarce goods and increase their price as a result: “I think it might get people interested in buying things, but it could also split consumers if they think everyone's going to bring their prices up," he said before adding, “The other problem is it's slightly political as well, so some retailers would want to steer clear of it.”

One retailer based in Texas is offering a “pre tariff” sale on Facebook.

Etsy seller Buzzy Park, who sells handmade bamboo picture frames, also offered a similar "pre-tariff " sale on his entire stock, starting this month and lasting until any new tariffs go into effect. "Hurry and get them at their current prices," Park wrote in a social media post.  

Scott Lincicome a trade expert at the Cato Institute said that consumers should not heed these warnings and act rationally heading into the new administration:

If consumers panic about things getting more expensive, they are playing right into the hands of companies around the country to use it as an excuse to raise prices, even when it's not necessary.

Mercosur Agreement Faces Opposition from Farmers

Farmers have begun protesting across France and other European nations over the European Union’s Mercosur agreement which seeks to establish tariff and duty-free trade with a host of nations comprising the South American bloc of Brazil, Argentina, Paraguay, Uruguay, and Bolivia.

Farmers fear being undercut by cheaper goods emanating from these countries which would establish one of the world’s biggest free trade zones of 750 million people – one-fifth of the global economy.

The agreement would see goods traded ranging from cars, machinery, pesticides, herbicides as well as wine and cheese.

Charlotte Emlinger an economist who specialises in trade and agriculture said while manufacturing industries set to benefit from the deal the losers could be the beef and poultry industry:

"What has been negotiated is a reduction in customs duties on a certain volume of products, such as a relatively small volume of beef. We're talking about 99,000 tonnes of beef. That's only 1.2% of European beef consumption. These volumes will have a limited impact on the European market," she said.

"The farmers' anger is understandable, even legitimate. This is an economically very fragile sector, which has recently had to cope with diseases and bad weather. I think Mercosur is the straw that broke the camel's back rather than the core of the problem," she argued.

While the French parliament voted against the deal it was a symbolic gesture with no legal standing. Opposition has also emerged in the frugal states of Austria and the Netherlands as well as Poland. France would need at least 35pc of the EU’s population to oppose the deal – 3 EU states at most.

Freight Prices Fluctuate Amid Global Volatility

Container freight rates varied heavily between January of last year and October of this year. Freight rates slumped to their lowest level on the 26th of October 2023, when the going rate for a 40-foot container was only $1,342 U.S. dollars. However, rates hit a whopping $5,900 in July 2024, the highest value on record. As of October 10th, 2024, freight rates decreased to $3,349 U.S. dollars per 40ft container.

While the costs of operating a container fleet have increased, the surge in freight rates has not served just to cover rising expenses. Most analysts attribute spiralling prices to operating on increased profit margins. Since the  start of the COVID-19 pandemic of the pandemic freight rates have increased has had some repercussions with Q2 of 2023 seeing main container shipping companies having an average profit margin of 8.9 percent, a decrease of almost 50 percent compared to the peak EBIT in the first quarter of 2022.