Businesses are starting to get ahead of changes in trade policies with a new administration.
Businesses understand that voters asked for change and are already acting in anticipation of a new administration that looks ready to act quickly with policy changes—particularly in trade. Imports have already accelerated this year as companies rush to hedge against potential tariffs and avoid strikes at East and Gulf coast ports. The volume of shipments going through the top six U.S. ports is up 14.7% year to date.
As trade policy takes shape, all indications are that the new administration will push forward with its promises for a muscular trade policy. With tariffs of 25% having been floated, both Canadian and Mexican leaders have reached out to the new administration, while simultaneously threatening retaliatory tariffs. Expect to see multiple rounds of discussions and negotiations before policy takes shape. And the China tariff story has yet to be written. The shaping of trade policy will introduce market volatility and continue to make its way into the overall economy as businesses react.
Beyond trade, the Treasury Secretary nominee is committed to U.S. dollar’s status as the world’s reserve currency, as well as reducing federal spending and the bloated federal debt load. He’s also stated a desire to reshape tax policy. Businesses and the markets will have more to digest as details emerge.
At the consumer level, the results so far this year have been mixed. Lower gasoline prices, which are down nearly 6% from 2023, provide some relief. However, they’re offset by food prices that have jumped 27.6% from pre-pandemic levels compared to overall inflation of 22%. New home sales dropped 17.3% in October due to hurricanes, while price levels rose slightly to a median price of a new single-family home at $437,300, roughly equal to a year ago.
Overall, the economy remains resilient though volatility is expected with the changes behind government transition.
