More than 75% of global trade professionals cite supply chain, regulations, and international policies as top concerns, which underscores the critical need for adaptation in a rapidly evolving landscape
In the ever-evolving world of global trade, the landscape is shifting dramatically, especially with the recent changes in leadership in the United States. As highlighted in a recent podcast (available on Spotify), in which Nadya Britton of the Thomson Reuters Institute and Marianne Rowden, CEO of the E Merchants Trade Council, the dynamics of e-commerce, trade policies, and the talent landscape are all factors that are at the forefront of industry concerns.
Not surprisingly, the Thomson Reuters Institute’s recent 2024 Global Trade Report found that more than 75% of respondents said their top concerns were supply chain, regulations, and international policies. In the podcast, Britton asked Rowden to elaborate on the importance of trade — especially e-commerce and digital trade — since those have been and continue to be the largest areas of growth across the globe.
E-commerce in the US and internationally
Over the past decade, e-commerce has seen exponential growth, with the pandemic pushing it into overdrive and resulting in a significant change in consumers’ behaviors as more people began shopping online as compared to in-person. As of early 2023, more than 40% of consumers in the United States said they preferred shopping online. As a result, e-commerce shipments hit a staggering 1 billion which resulted in overwhelmed customs administrations and prompted legislative responses in fiscal year 2023, explained Rowden.
In the US
For example, the de minimis rule in the US that allows duty-free shipments on all imports under $800 has led to some entities using the $800 or less threshold to export products to the US duty-free. Over the years, the US government has taken notice and this de minimis rule is under scrutiny. Today, there are with several bills in Congress that proposes changes in the rule, including the Biden Administration proposed changes announced in September.
These potential changes along with other proposed changes to tariffs and trade by the incoming Trump administration could significantly impact e-commerce businesses, particularly small sellers operating on thin margins, as the prospect of increased costs due to regulatory changes poses a threat to their competitiveness in the global market.
The WTO E-commerce agreement
Internationally, 76 World Trade Organization (WTO) members, including the United States, came up with an e-commerce agreement, known as the Joint Statement Initiative, that aims to level the playing field for e-commerce trade. The initiative establishes a set of common rules across a range of electronic commerce issues, including enabling e-commerce; promoting openness and trust in e-commerce; cross-cutting issues; telecommunications, and market access for e-commerce firms. However, the future of this initiative faces uncertainty as the withdrawal of the US from key digital trade policies has created uncertainty that could impact international e-commerce and digital trade, Rowan said.
While the fate of the agreement remains in doubt, there are ongoing discussions to revive it even with the looming expiration of the WTO moratorium on customs duties for electronic transmissions. This instability adds another layer of complexity for e-commerce businesses navigating international trade.
Talent, technology, tariffs and tax
Of the other top concerns and strategic priorities cited in the Global Trade Report, the challenge of finding the right talent with the right skills was noted by survey respondents. Historically, the path to a career in international trade compliance has been unconventional, with many professionals stumbling into the field, Rowan said; however, over the years and especially since the pandemic, the trade compliance industry has gained visibility. For those working in trade, there is not a systemized approach to the required skills needed, and therefore a more ad hoc approach has evolved.
Today, with the increased complexities in trade and supply coupled with the need for people who have specific trade-related skills, there is a growing need for standardized education and certification programs. For example, the e-Merchants Trade Council has introduced a program that would not only introduce continuing education requirements for customs brokers but also create a curriculum for standards-based certification program for trade professionals to fill the gap and standardize the professional education needed to work global trade, Rowan explained. These initiatives aim to provide a clear pathway for individuals entering the field and ensure that businesses have access to skilled professionals.
The recent “2024 Global Trade Report” found that more than 75% of respondents said their top concerns were supply chain, regulations, and international policies.
Interestingly, technology did not emerge as a top concern in the report, as it was overshadowed by the pressing issue of talent. While technology offers potential solutions for trade compliance and efficiency, the complexity of trade regulations and the need for human expertise remain much more critical. The development of AI and machine learning tools for tasks like tariff classification is underway, but progress has been slower than anticipated. The unique intricacies of trade regulations pose challenges for automation, highlighting the continued importance of skilled professionals in the field.
Finally, the return of President Trump to the Oval Office brings with it a renewed focus on tariffs and taxation. The proposed 60% tariffs on Chinese goods and a 10% across-the-board tariffs that have been suggested may represent a significant departure from the current average duty rate of 2%. Such measures could certainly have inflationary effects, impacting consumers and businesses alike. However, other suggested proposals, such as eliminating income tax, presents a more radical shift in economic policy and raises questions about the sustainability of government funding and the overall impact on the economy.
This balance between protecting domestic industries and maintaining consumer affordability will be a critical consideration in the coming years.
Conclusion
As we move from an era of a more managed trade approach to the one proposed by the Trump Administration, businesses must brace for increased complexity and uncertainty. As reflected in our Global Trade Report, the interplay of e-commerce growth, regulatory changes, talent shortages, and evolving trade policies creates a challenging environment for global trade professionals. To thrive in this new era, businesses must stay informed, adapt to changing regulations, and invest in developing the skills of their workforce.
The road ahead may be fraught with challenges, but with strategic planning and a proactive approach, businesses can navigate the complexities of global trade.
You can download a full copy of the Thomson Reuters Institute’s new 2024 Global Trade Report, here.
