Potential Impacts of the 2024 U.S. Presidential Election on Supply Chains
As the world braces for the 2024 U.S. presidential election, the possible ripple effects on global trade and supply chains keep procurement professionals on edge. Let’s see if we can draw upon recent historical data to forecast potential outcomes of the upcoming election on supply chain management.
Historical trends and predictions
Presidential elections have historically been a harbinger of change, often bringing about policy shifts that can fortify or destabilize global trade networks. The last two presidential campaigns brought forth a slew of related predictions, ranging from the renegotiation of trade agreements to the imposition of tariffs.
However, the actual outcomes were sometimes less dramatic than anticipated, while at other times, they were overshadowed by unforeseen global events, such as the COVID-19 pandemic.
Impacts of the first Trump administration on supply chains
The first Trump administration was characterized by bold policies that left an indelible mark on global supply chains.
Let's explore the most important ones:
The Trump administration took an aggressive stance on trade, mainly through the Section 301 tariff war with China, which imposed a 10% and later 25% import tax on hundreds of billions of dollars worth of Chinese imports to revive American manufacturing, reduce the trade deficit, and get China to agree to a new trade deal.
The actual impact was multifaceted, leading to a complex web of trade realignments.
One study showed that Trump’s trade policies with China resulted in American companies shifting their supply from China to other Asian countries like Bangladesh, Hong Kong, India, and Taiwan, which increased the costs in their supply chains.
The Trump administration also designed a series of deregulation policies in the energy and financial sectors to reduce operational costs and foster economic growth. These changes impacted supply chain managers within the renewable energy sector as they navigated a new landscape where traditional energy sources were gaining prominence again.
The COVID-19 pandemic presented an unprecedented challenge to supply chains worldwide. The Trump administration’s response, which included a mix of travel restrictions and economic stimulus measures, had a varied impact. Some initiatives provided much-needed relief to disrupted supply chains, while others may have inadvertently intensified the strain on these critical networks.
Impacts of the first Biden administration on supply chains
The Biden administration’s policies have continued to shape the global supply chain landscape.
The U.S. CHIPS and Science Act, highlighted by Gartner , represents a significant pivot towards bolstering domestic semiconductor production. This legislation has not only shifted semiconductor supply chains from Asia to the U.S. Still, it has also positioned Mexico as a burgeoning manufacturing hub for various goods destined for the American market.
President Biden’s commitment to climate action has had a tangible impact on the oil and gas industries in the U.S. while simultaneously catalyzing the growth of renewable energy sectors and electric vehicles. These policies have redefined the energy supply chain in the U.S., with long-term implications for sustainability and economic viability.
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Many supply chain managers expected the Biden administration to eliminate the tariffs on Chinese imports imposed by President Trump in 2018-2019. For American businesses, restoring business as usual with the Asian giant would have meant reconnecting with cheaper Chinese suppliers. However, this never happened, despite some analysts considering President Biden’s stance on China’s economic growth as weak.
What if President Biden wins the 2024 U.S. presidential election?
As President Biden gears up for the 2024 U.S. presidential election, his administration’s proposals could significantly influence global supply chains, particularly concerning China.
These are President Biden's main proposals:
Biden’s approach to China involves strengthening alliances and partnerships to present a united front against China’s economic practices deemed unfair. This strategy could lead to more coordinated international efforts to balance China’s growing influence and could impact global supply chains by creating new trade blocs and agreements.
During his campaign, President Biden has repeatedly stressed the need to diversify supply chains away from China. This could mean increased investment in other regions, including, but not limited to, Mexico.
It’s no secret that China invests heavily in industrial espionage. One survey from the Center for Strategic and & International Studies (CSIS) found that 54% of Chinese espionage incidents since 2000 sought to steal commercial technologies, while 29% targeted military technology.
Biden proposes cracking down on industrial espionage and enhancing data security measures. This could lead to tighter regulations and controls on technology transfers, impacting companies with supply chains intertwined with Chinese tech industries.
What if President Trump wins the 2024 U.S. presidential election?
Former President Trump’s potential return to office brings forth proposals that could drastically alter the landscape of international trade and supply chains:
In his campaign for the 2024 U.S. presidential election, Trump has proposed increasing tariffs on all Chinese imports to 60%. Such a significant hike could escalate trade tensions and prompt companies to seek alternative sourcing options.
Trump also proposes a 10% blanket tariff on all other imports. This policy could increase production costs and cause companies to reevaluate their global sourcing strategies.
Withdrawing from the Paris Accord and reversing climate actions taken by the Biden administration could have profound implications for industries related to renewable energy and sustainability, affecting supply chains focused on these sectors while bolstering supply chains for oil and gas.
The 2024 U.S. presidential elections: A focus on China
The 2024 U.S. presidential elections present a pivotal moment for global supply chains, with China at the forefront of the discourse. Supply chain managers must prepare for various scenarios that may unfold post-election.
Tools like BabelusAI can assist procurement professionals in discovering new suppliers, fostering more resilient and diversified supply chains that can withstand the uncertainties of political shifts.
Write us a message and learn how we can shield your supply chain from uncertainty, or book a call now to set up a custom pilot for your company at no cost.