Tomorrow marks the 2024 U.S. presidential election, a pivotal event with significant implications for supply chains. Supply chain leaders are closely monitoring the outcome, understanding that the election results could trigger a series of policy shifts with widespread impact. In an already uncertain global landscape, companies are preparing for potential adjustments in trade policies, regulatory frameworks, and tariffs, which could alter supply chains domestically and internationally. This election presents not only a change in leadership but also a critical juncture for supply chains, influencing how goods are transported, how materials are sourced, and how resilient supply networks must be to navigate future disruptions.
Predictable Uncertainty: Two Paths, One Impact on Supply Chains
Regardless of the election outcome, both candidates want to adjust U.S. trade policy, albeit with different focuses. Kamala Harris is expected to continue many of the Biden administration’s trade policies, in which trade functions primarily as a tool to support broader goals, including environmental and social policy, domestic manufacturing, and job creation. In contrast, Donald Trump has outlined a more direct approach in which tariffs are a central tool. His proposals include a 10 to 20 percent tariff on general imports and a 60 percent tariff specifically on Chinese goods. Under such a policy, a Trump administration could increase trade tensions and cause companies to rethink their sourcing and supply strategies.
But the impact goes beyond tariffs alone. The candidates’ broader trade policies are likely to shape both the economic landscape and corporate strategies. Harris’ approach would likely emphasize strategic alliances with targeted tariffs to address specific supply chain vulnerabilities and encourage a cooperative approach. Trump’s stance, which is expected to be more comprehensive, could lead to significant shifts within supply chains if more comprehensive import tariffs are imposed. In either case, supply chain leaders may need to consider new strategies around sourcing, resilience and adapting to potential changes in trade dynamics.
The Tariff Tug-of-War: What’s on the Line?
Tariffs might appear to be a straightforward policy tool, but their impact reverberates through every layer of the economy, influencing supply chains at multiple points. Past examples demonstrate some surprising outcomes, particularly for U.S. businesses. Take the tariffs introduced in 2018: while many anticipated that these costs would be absorbed by China, the reality was different—U.S. consumers and companies often shouldered the added expenses. Lower-income households felt the strain, as they depend on affordable imports like electronics and household goods.
If a new wave of high tariffs were introduced, supply chains would once again need to adapt swiftly. Companies with strong ties to China or dependencies on imported components would likely face tighter profit margins, higher operational costs, and reduced productivity. Potential tariffs could also lead to retaliatory measures from major trade partners such as the EU, which has already indicated readiness to respond to new tariffs.
In contrast, a Harris administration might opt for a more measured approach, keeping existing tariffs on goods related to national security but likely avoiding broad new increases. For supply chains, these different approaches highlight the in-trade policies.
Figure 2: Major Us trading partners most exposed to trade policy change under Trump (source: EIU)
From China with Uncertainty: Trade and Diplomacy on the Edge
The U.S.-China trade relationship is likely to remain complex, with each candidate likely to take different approaches if elected. Trump’s expected strategy involves a more forceful use of tariffs, not only to negotiate trade terms but also to address broader foreign policy goals. This approach would likely mean increased tariffs and expanded restrictions on imports from China, with tariffs used as a primary tool for both economic and security goals.
In contrast, Harris is likely to continue Biden’s “managed competition” approach, which involves balancing trade competitiveness with international stability and working with allies. Her approach would emphasize specific measures over widespread tariff hikes, focusing particularly on areas impacting national security.
For companies with supply chain interests in China, these two scenarios mean they need to prepare for different impacts. Under a Trump administration, increased tariffs could require greater adaptability, potentially increasing costs and encouraging supply chain diversification. With Harris, companies could experience a more stable trading environment, although they should still prepare for strategic adjustments in key sectors. In both cases, by diversifying their supplier networks and making their supply chains more flexible, companies could mitigate their risks and adapt to both scenarios.
Figure 3: Value of import of goods in China from 2013 to 2023 (source: statista)
Resilience and Adaptability: The Winning Strategy for Supply Chains
In today’s global landscape, flexibility is essential for supply chains. As companies navigate an unpredictable political environment, resilience has become a necessary focus. Many companies are recognizing the value of having a strong data infrastructure to support transparency and respond to political changes in a timely manner. This includes expanding supplier networks, investing in comprehensive risk management strategies, and leveraging digital tools like AI for predictive insights, all with the goal of preparing for both expected and unforeseen changes that may accompany the election.
The upcoming election could be a pivotal point for companies evaluating their reliance on Chinese supply chains. Switching to alternative supplier centers or localizing production can be complex and involve higher upfront costs, but these steps could provide more resilience against potential tariffs and geopolitical shifts in the future. Options like re-shoring and near-shoring allow companies to manage risk more effectively and provide a proactive approach to long-term supply chain resilience.
Navigating the Post-Election Landscape
Once the election is decided, supply chain teams will need to act swiftly, as there may be limited time to adapt to new policies. Each candidate’s approach is likely to drive prompt responses across the business landscape. Broad tariffs under Trump would likely require immediate adjustments in sourcing and production strategies to mitigate cost impacts. In contrast, Harris’s more targeted tariff approach may offer a more gradual adaptation period for businesses to adjust their operations.
For supply chain leaders, the focus is clear: adaptability, visibility, and resilience are now essential components of effective supply chain management. Proactive planning for potential election outcomes can help companies secure a competitive edge—whether through diversifying suppliers, upgrading data systems, or building partnerships that can withstand changing political environments. The 2024 election, like previous shifts, will test how agile and forward-thinking supply chains can be in navigating new challenges.
