The International Longshoreman Association, the union that works portside unloading containers full of foreign goods — whether it’s frozen seafood from Thailand or everything else from China — went on strike Oct. 1. ILA’s president, Harold Daggett, said the strike will be “crippling.”
“When my men hit the streets, every single port from Maine to Texas will lockdown. You know what’s going to happen? I’ll tell you: the first week it will be all over the news every night. The second week, guys who sell cars can’t sell cars because the cars aren’t coming in off the ships, so those guys get laid off,” Daggett said.
The United States has a $10 billion monthly trade deficit in cars, trucks and auto parts with Mexico. Increasingly, Mexico makes our cars. The strike won’t affect those cars unless they are brought in by ship.
Daggett goes on with his warning, high on the worst-case scenario: “In the third week, malls start closing because they can’t get the goods from China. Everything in the United States comes in on a ship. The steel’s not coming in. The lumber’s not coming in.”
Malls, of course, are already closing — 24 percent more this year than last year — as are large stores like Macy’s, which plans to close 150 stores before the year is out. That’s not because of a port strike. That’s because of imports. It is easier for people to shop online and buy directly from low-cost nations, led by China. It might take a little longer to get to your house, but it comes in duty-free.
We don’t know how long the strike will last. It might be over by now. If not, we should consider Dagget’s words carefully. If he is right, and we are still dealing with this by Halloween, supply chains may start looking like they did during COVID lockdowns, which led to outrageous shipping fees.
American businesses learned then that relying on imports from markets so far away was detrimental. Some, post-COVID, decided to source from elsewhere. They relied on Southeast Asia, which requires ships. Others relied on Mexico, now our No. 1 source of imports.
Mostly, Mexican-made goods will come in because longshoremen primarily work at ocean ports, not the land ports connecting Nuevo Leon, Mexico, to Texas. However, if the strike is long-lasting, land shipping prices will rise, potentially affecting inflation.
During the COVID years, the United States hit its first trillion-dollar goods deficit with the world. It has been rising ever since, and we will end this year with a $1.2 trillion goods deficit because of our dependence on imports and not because our economy is so much bigger and spendthrift than all others. This dependence comes with financial risks. We saw it during the pandemic. We are being warned about it again by the ILA leadership, even though Daggett is not coming out and saying it that way.
My business faced no disruptions to our supply chains during COVID and won’t face any problems today due to the port strikes. We rely on U.S. supply chains to serve our U.S. customers.
If a company works primarily with domestic manufacturers, it avoids being at the mercy of foreign and local labor disputes, geopolitical conflict or unpredictable weather.
We see how reliance on imports can lead to costly headaches. Localizing supply chains is the smartest way to secure American supply chains from an increasingly chaotic world.
Imports won’t vanish. The longshoremen will still have ships to unload. If we had less reliance on imports, we as Americans would be richer (more jobs making things here), and individual companies would have less to worry about when events and port strikes sneak up on us.