While President Trump has continuously emphasized free and fair trade, the logistics and supply chain industry is looking to the new administration with hope for fewer regulations and better opportunities in the market. For domestic companies, the new administration is seeking to renew international interest, making the U.S. a great exporter of products once again and ensuring American workers have jobs.
However, as the new administration is dealing with many outside forces that may distract from the administration’s goals, currently the only certainty is uncertainty in how the new administration will work to improve the logistics and trucking industry. As a result, supply chain entities must understand how the administration’s policies may impact supply chain operations and how future budgeting bills could pour millions back into domestic trade.
As a result, logistics and supply chain executives are rethinking their business strategies to align with Trump-Era rules and politics, reports Deborah Abrams Kaplan of Supply Chain Dive. In response, supply chain leaders must consider their options. For example, supply chains may increase enforcement of existing trade treaties, implement changes bilaterally, adjust border taxes, increase tariffs among certain industries or commodities and look at how decisions like Brexit, that are domestic in nature for Britain, may impact trade.
Under President Trump, the Federal Motor Carrier Safety Administration (FMSCA) withdrew rulemaking processes for the use of compliance safety accountability (CSA) data, reports JD Supra. This withdrawal means that companies can continue operating and leveraging Big Data for internal purposes, not just the sources of increased regulations by the FMCSA.
Another game-changer for the Trump-Era logistics and supply chain industry is international trade and its impact on maritime ports. Within the first 100 days, U.S. Customs and Border Protection (CBP) revoked decades of ruling letters that determined proper compliance and regulatory statutes for domestic and international imports and exports. While this appears to level the playing field and reduce the burden on shippers, logistics and supply chain professionals still need to consider the overall impact on export compliance.
For example, if a company goes ahead with shipments that would knowingly violate previous CBP ruling letters, possible backlash and/ or fine assessment by the new administration could be possible. Therefore, shippers and carriers should continue operation under previous statutes until actual legislation has been released giving direction on what shippers and carriers can and cannot do with respect to maritime trade regulations.
If the new administration were to challenge all existing trade policies, it would result in a severe economic setback and we don’t expect that to happen in full as President Trump knows a strong economy is what he wants to have in the United States. President Trump has also expressed his dissatisfaction with China over its various trade policies and impact on U.S. manufacturing. However, cutting all ties with China might be impossible as trade between China and the U.S. currently exceeds $416 billion annually.
As explained by the Wall Street Journal, this would almost certainly guarantee a different victor in the 2020 election cycle. While this might seem like China is the biggest trade partner with the U.S., Mexico engages in more trade with the U.S. In fact, more than $579.7 billion in total trade was conducted between the U.S. and Mexico in 2016, asserts the Office of the United States Trade Representative, making Mexico the third-largest trading partner with the U.S.
Essentially, any changes in trade with our current largest trading partners could result in the loss of a major trading partner and severely impact the U.S. economy. Instead, it is more likely the new administration will work to provide perks to companies that willingly relocate manufacturing from Mexico and other countries to the U.S, such as better use of warehousing space, reports Material Handling and Logistics. In addition, President Trump does not appear ready to irrevocably withdraw from NAFTA quite yet, as mentioned during his campaign.
There are real reasons to stand behind the new administration as a logistics and supply chain executive or entity. President Trump has promised to level the playing field in terms of Americans competing for jobs that have been sent overseas. However, current regulations and oversight continue, and companies must not abandon their existing policies and plans for compliance with regulations across all modes of transit, including the ELD mandate. This will provide the greatest stability until legislation moves through both the House and Senate and receives the president’s signature.
That way, companies that do implement such changes, including working with third-party logistics providers (3PLs) to reach such levels of compliance at lower costs, can scale back operations when such laws pass. Ultimately, companies must look beyond the politics of the new administration toward a future of profitability. Since only time will tell what policies do and do not become laws, it is imperative for logistics and supply chain leaders to look at the new administration’s promises with both openness, optimism, but as well as plan for all possible outcomes. By understanding how the current administration’s actions may evolve in the coming months, logistics and supply chain entities can prepare for both possibilities of widespread deregulation or increased regulation that may occur in the near future.
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