Rising US-China Trade Tension Triggers Companies To Prepone Orders, Intensifying Supply Chain Woes: 'People Would Rather Have Christmas Goods Already In The Warehouse'

In light of the potential for a heightened trade war between the United States and China during the Trump era, retailers and manufacturers are making their Christmas orders sooner than normal. This could worsen existing supply chain problems.

What Happened: Vincent Clerc, the CEO of AP Møller-Maersk, the world’s second-largest container shipping company, indicated that customers are bringing forward their orders due to potential disruptions and the looming threat of a trade war, the Financial Times reported on Wednesday.

"There's clearly, not only for the US but in general, customers bringing orders forward — because of disruption, because of the potential for a trade war, people would rather have Christmas goods already in the warehouse. It's hard to say how much is going on though," he said.

Global supply chains, already under pressure from the Covid-19 pandemic and Houthi attacks on shipping routes, are feeling additional stress. Maersk, which handles approximately 20% of all seaborne freight, has recently increased its financial forecast for 2024 for the third time since May, capitalizing on the ongoing disruption and higher-than-expected global trade growth.

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Despite market fears of a potential U.S. recession, Clerc stated that Maersk does not see any signs of the US entering a recession. However, he acknowledged the uncertainty surrounding the duration of the current high demand.

Why It Matters: The escalating trade tensions between the U.S. and China have been a cause for concern for some time. In May, the U.S. imposed new trade restrictions on 37 Chinese firms over military and Russian connections, a move that China firmly opposed. This was followed by China criticizing the U.S. and other G7 countries for hyping up trade overcapacity and attempting to set obstacles and limitations.

The sanctions have also caused strains in trade between China and its ally Russia, with banks taking up to six months to complete payments.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari