The resumption of Donald Trump’s aggressive trade policies has businesses scurrying to brace themselves for possible tumult. With tariffs and trade barriers tumbling, many companies had been rethinking a risky corporate strategy they desperately wanted to discard: hoarding goods.
Why Businesses Are Worried
In his last term, median growth would rise by 0.8 percentage points — but Trump’s trade conflicts with China, Europe and other major trading partners created higher costs, supply chain disruptions and unpredictable market conditions across his first term. Now, as he seeks re-election, Trump has started musing about even more severe measures — such as across-the-board tariffs on imports and deeper decoupling from China.
For businesses that depend on global supply chains, this is a huge headache. Overnight tariffs can cause imported materials to become more expensive out of the blue and trade restrictions can send companies searching for alternatives. Hedging against these risks has become stockpiling — buying and storing extra inventory before it’s needed.
The Return of Stockpiling
Hoarding was a standard Trump first term gambit, for industries dependent on imported parts, such as manufacturing, electronics and automotive. Now, executives are giving the idea a second look.
- Higher Tariffs Mean Higher Costs — If Trump slaps new tariffs on China, companies that have already loaded up on certain materials can avoid unexpected price hikes.
- Steering Clear of Supply Chain Delays – When trade wars break out, you can bet your bottom dollar that customs processing will slow and logistics routes will become congested. Extra inventory serves as a kind of buffer.
- Geopolitical Tensions – As U.S.-China relations are pressured and tested, companies are wary of sudden export bans or sanctions.
But stockpiling is not an easy solution. Tying up cash Storing more than enough inventory for seasonal fluctuations in demand increases sales-related costs and warehousing costs. And if demand falls, companies can find themselves with unsold inventory. Still, many view it as the lesser of two evils against the prospect of being caught by surprise by new trade barriers.
Industries Most at Risk
Some are more at risk than others:
- Electronics & Semiconductors – Extremely dependent on Chinese imports which are already disrupted due to chip shortages.
- Automotive – Many components of cars are imported; tariffs could increase production costs.
- Retail & Consumer Goods: Big-box stores and e-commerce sellers rely on constant imports to fill shelves.
Supply-Chain Changes Take Time
In addition to the short-term stockpiling, many companies are also trying to diversify their supply chain beyond China by relocating production to other countries, like Mexico, Vietnam or India. But it’s a lot of work and investment. Until that change goes into full effect, stockpiling is a stopgap.
What’s Next?
If Trump wins a second term and implements his trade plans, businesses will make stockpiling a drag on economic growth. The alternative — sitting back and waiting to see how things play out — risks leaving businesses vulnerable to sudden price increases and scarcity.
For now, companies are paying close attention, mindful of the costs of holding extra inventory versus the risks of facing yet another rocky trade war. But one thing is for sure: prepping is important at a time when few things are certain in the economy.
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