Impact of the 2024 US Presidential Election on the Transport and Logistics Market

Section AsstrA news Date 22.08.2024

AsstrA, an international transport and logistics company, has analyzed the potential impacts of the 2024 US Presidential Election on the transportation and logistics industry. The 2024 US Presidential Election stands as a critical juncture with far-reaching consequences for global markets. The trajectory of US policies on trade, the environment, fiscal matters, and foreign relations will influence the global economic landscape, impacting market stability, international trade patterns, and investments in ecological initiatives.

Infrastructure Investment

If the Democratic Party wins: The Democratic Party's emphasis on substantial infrastructure investments, including roads, bridges, and ports, could greatly enhance transportation networks. A focus on sustainable projects, promoting electric vehicles (EVs), and expanding EV charging networks could drive the logistics sector toward more environmentally friendly operations.

If the Republican Party wins: A Republican administration might continue to support traditional infrastructure projects. While this could improve transportation networks, it might not prioritize sustainability to the same extent.

Regulation and Compliance

If the Democratic Party wins: Stricter environmental regulations under the Democratic administration could lead to higher compliance costs for transport companies but also incentivize innovation in cleaner technologies. Additionally, there could be an increase in labor and safety regulations impacting the industry.

If the Republican Party wins: A Republican administration may continue to roll back environmental regulations, potentially lowering compliance costs for transport companies but possibly affecting the push toward sustainable logistics practices. Policies might favor employer flexibility over strict labor regulations.

Trade Policies

If the Democratic Party wins: A Democratic administration is likely to support re-engagement with international trade partners and institutions, potentially reducing trade barriers and creating more stable trade relationships. This could encourage domestic production, altering supply chains with a potential increase in domestic transport and logistics needs.

If the Republican Party wins: The Republican Party's protectionist trade measures could lead to trade tariffs and barriers, complicating international logistics, and increasing costs and uncertainties in global supply chains. Ongoing renegotiation of trade agreements might create a volatile trade environment.

Preparing for potential supply chain disruptions

The first months of 2024 have already strained U.S. supply chains due to various global disruptions. The upcoming presidential election in November adds to the uncertainty, with potential impacts on the U.S. economy and supply chains. Predicting these effects is challenging due to the complexity of factors involved, such as candidates' policies, the economic climate, and political polarization.

Presidential elections consistently create additional risks and disruptions to supply chains. Historical data shows mixed impacts: the 2020 COVID-19 pandemic overshadowed election effects, while the 2016 election caused trade policy uncertainty. In contrast, the 2012 election saw no significant election-related disruptions, and the 2008 financial crisis had a broader impact on supply chains than the election itself.

Key areas where the 2024 election might influence supply chains include trade policy, infrastructure improvements, regulations, labor laws, and immigration policies. Trade policies can affect the cost and flow of goods, while infrastructure upgrades can enhance transportation efficiency. Regulatory changes and labor laws impact production costs and worker availability. Immigration policies might exacerbate existing labor shortages, particularly in warehouses. Economic policies stemming from the election can influence consumer confidence and spending, potentially causing temporary disruptions in certain sectors.

The Impact of U.S. Trade Policies on Global Trade Dynamics

Historically, the U.S. approach to trade agreements and tariffs has significantly influenced international trade. In 2018, the Republican administration's "trade war" tariffs on Chinese imports affected over USD 360 billion worth of goods, disrupting global supply chains and causing a 0.3% dip in global GDP, according to the International Monetary Fund (IMF). The Republicans have pledged to increase these tariffs if re-elected. Surprisingly, the Democratic administration has largely maintained these tariffs during its term but has ramped up criticism of Republican trade policies, promising a drastically different approach if re-elected.

Trade partners of both China and the United States could experience substantial gains or losses depending on the election outcome and subsequent trade policy changes. For instance, the 2018 increase in U.S. restrictions on Chinese imports allowed Mexico's export share to the U.S. to rise, making it the top U.S. import source this year, surpassing China. On the other hand, Europe struggled to capitalize on U.S.-China trade tensions due to its continued dependence on Chinese supply chains. Despite efforts to "de-risk" by reducing investments in China, Europe’s reliance on Chinese manufacturing and supplies remains a hurdle in meeting U.S. import demands and benefiting from potential policy shifts.

Global climate leadership and renewable energy investments

A similarly impactful point of contention is the U.S.'s leadership role in climate change initiatives. The American re-entry into the Paris Agreement under the Democratic administration marked a significant shift towards prioritizing climate change on the global stage. This move, alongside the controversial tax-credit-gifting Inflation Reduction Act, has spurred global investments in renewable energy. Due to the U.S.'s size and wealth, manufacturers worldwide are eager to access the American market, with global renewable investments increasing by nearly 50% across all categories since these climate spending policies were enacted in 2021.

The Republican administration’s skepticism toward some of these extensive climate spending measures stems from a geoeconomic perspective. One area of concern is the rapid adoption of electric vehicles (EVs). Many Western nations, including the U.S., have delayed pro-EV policies due to fears of China's control over essential EV components. The Republicans have already endorsed a reversal and "then some" of Democratic climate policies but have not yet addressed whether they would attempt to leave the Paris Agreement again.

With both parties firmly committed to their opposing views on the U.S.'s role in the climate debate, America's choice in November is bound to have significant repercussions for international energy markets and green technology investments for at least the next four years.