Expeditors (EXPD) Status Update summary

Macroeconomic outlook for 2025

• Global growth is expected to improve slightly in 2025, with growth engines shifting away from the U.S. and China toward other regions.

• U.S. growth will decelerate but remain above trend at around 2.3%, while China faces structural challenges and moderate deceleration.

• Inflation and interest rates are normalizing, with U.S. inflation forecast below 2.5% and Europe below 2%.

• Federal Reserve rates are expected to drop to around 3.5% by end of 2025, improving the business environment but maintaining a higher-for-longer rate regime.

• Inflation pressures persist in key markets like Vietnam and Mexico due to tight capacity and strong FDI, impacting competitiveness.

Global trade and supply chain dynamics

• Global trade is returning to pre-COVID levels but faces risks from protectionism, trade conflicts, and retaliation.

• U.S. trade policy is highly uncertain, with potential for significant tariffs on China and other countries, and a mix of industrial and sustainability policy changes.

• Mexico is prioritizing nearshoring and upstream manufacturing, imposing tariffs on Chinese imports to align with U.S. interests.

• EU responses are likely to be more collaborative but could retaliate if U.S. actions are intense; China is preparing for targeted retaliation and export restrictions.

• Supply chains are increasingly exposed to geopolitical risks, driving trends toward regionalization, reshoring, and automation.

Geopolitical risks and scenarios

• Key geopolitical hotspots include Russia-Ukraine, South China Sea, China-Taiwan, and the Middle East, with potential for escalation in 2025-2027.

• Russia-Ukraine conflict may move toward a negotiated solution but will likely leave instability in the region.

• South China Sea tensions are rising, especially between China and the Philippines, with U.S. involvement as a key variable.

• Middle East instability, particularly in Syria, could impact oil prices and supply chains if escalation occurs.