Expeditors (EXPD) Status Update summary

Overview of global trade policy shifts

• Recent U.S. tariffs on Chinese exports have raised trade-weighted average tariffs to nearly 20% by 2023, with further escalation possible as key studies are due in April, potentially prompting more trade actions against China and the E.U.

• China’s response to U.S. tariffs has been measured but targeted, using export bans, quotas, and firm-level actions, while retaining room for further escalation or concessions in a potential trade deal.

• The E.U. faces imminent U.S. tariffs and is considering both de-escalatory and retaliatory measures, with a notable softening of its stance toward China to avoid a two-front trade war.

Trade barriers and friend-shoring trends

• Emerging markets, especially Southeast Asia and Latin America, are increasing trade barriers against Chinese goods, mainly through domestic industrial support and selective tariffs on low-value imports.

• Despite rising barriers, many friend-shoring countries still rely heavily on Chinese intermediate goods, with imports of these inputs growing even as final assembly shifts to new locations.

• Chinese firms are increasing FDI in friend-shoring countries, particularly in electronics and automotive sectors, aligning with multinational supply chain shifts.

Supply chain and labor market implications

• Tight labor markets are emerging in key friend-shoring destinations like Malaysia and Vietnam, potentially constraining capacity and driving up labor costs and inflation.

• Countries are fostering local suppliers and industry specialization to reduce reliance on Chinese inputs, with policies ranging from local content requirements to targeted sector development.

• Supply chain fragmentation is expected to increase, requiring ongoing monitoring, contingency planning, and diversification of sourcing and markets.