When it comes to President Trump's tariffs, there are a lot of questions about things like what other countries and goods may get hit with levies next. That uncertainty has some businesses waiting to see what's going to happen next rather than choosing to invest or make big supply chain-related decisions now, Flexport founder and CEO Ryan Petersen says. Find out why in the video above.
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So what kind of changes have you been seeing? What kind of patterns have you been seeing, whether it's geographic patterns or patterns of particular goods that have changed as people have sort of batten down the hatches getting ready for this?
Yeah, well, so Flexport's one of the largest providers of air and ocean freight and one of the largest customs brokerages in the United States. So we see a lot, we see it all basically. Um, what we've seen for a long time is people shifting supply chains out of China and moving sometimes out of China altogether. A lot of it is what they call China plus one, moving parts of the supply chain. Vietnam's been the big beneficiary. But, you know, right now what's happened, especially with the tariffs that have hit, uh, briefly Mexico, but actually been implemented against Canada, is that people now feel a little bit of paralysis because there's no if, you know, Canada is subject to higher duties and the European Union seems like it's coming down the pipeline, then you can't really feel that Vietnam or Malaysia or India are safe havens against duties. So people feel a little bit of paralysis, a little bit of wait and see. Let's see when the next shoe's going to drop, where those duties are going to land before, you know, supply chains are long-term footprints. So you don't really want to make long-term investments if it's uncertain what the landscape's going to look like even a few months from now.
Yeah, and I guess layered on all the tariff uncertainty, maybe some consumer uncertainty too, because they're watching all the tariff headlines, economic headlines, and there are all these concerns now bubbling up about consumer spending. How, is that, I mean, is it sort of, in your view, is it sort of difficult to separate out from the tariff uncertainty when it comes to what companies are doing?
It's a little bit difficult. I mean, we've got some companies that are being hit with higher duties, you know, as much as 50, 60% in some case higher than it was this time last year for certain products. And so there's no, there's no world in which the companies can just absorb that cost. They're going to have to pass it through to consumers in the form of higher prices. And now, big open question for a lot of categories of goods is do consumers keep buying? Um, are they, does demand get diminished? It's a little too early to say on that front, but for certain categories that are kind of not must haves, you would think that spend will shift onto other categories. America is relatively resistant against this. We, we import less as a percentage of our GDP than almost any developing world country. We're self-sufficient in food and energy and most, there's big hype around trade and imports from China and stuff, but the reality is we depend less on trade than almost any country in the world. So it's not that all prices are going to go up for everything, but for certain categories they will.