Quick Hit:

Dockworkers represented by the International Longshoremen’s Association are set to strike at midnight Tuesday, demanding a 77% wage increase after stalled negotiations with port employers. The strike threatens to disrupt U.S. trade, with major retailers like Walmart and Target warning of price increases and supply shortages.

Key Details:

• The strike is set to begin Tuesday night into Wednesday, with dockworkers halting trade at ports from Maine to Texas.

• Workers, represented by the International Longshoremen’s Association (ILA), are demanding a 77% wage increase over six years, frustrated by the skyrocketing profits of ocean carriers during the pandemic.

• President Biden has stated he will not intervene using the Taft-Hartley Act, despite concerns from major retailers about the economic fallout.

Diving Deeper:

The strike, led by the International Longshoremen’s Association (ILA), represents 45,000 dockworkers at key ports along the East and Gulf Coasts, and is scheduled to begin at midnight Tuesday night into Wednesday. According to a report from the Wall Street Journal, negotiations with port employers broke down after the ILA demanded a 77% wage increase over six years, arguing that workers deserve a share of the profits ocean carriers earned during the pandemic and due to recent freight rate hikes. The employers have countered with a 40% wage increase, which ILA President Harold Daggett called “insulting.”

Ports like New York, New Jersey, and Baltimore, which handle a significant portion of U.S. imports including cars, food, and heavy machinery, are expected to come to a standstill. This has alarmed major retailers such as Walmart and Target, who are warning that the strike could exacerbate inflation and lead to empty shelves during the holiday season. Tim Ryan, owner of Square 1 Farms, which imports asparagus from Peru, has already shifted to flying in goods to avoid them being stranded at sea, increasing transportation costs by fourfold.

The strike could cost the U.S. economy between $3.8 billion and $4.5 billion a day, according to JP Morgan analysts, though some of those losses may be recuperated after normal operations resume. Despite the potential economic damage, President Biden has made it clear that he will not invoke the Taft-Hartley Act, which would allow the government to impose an 80-day cooling-off period. Biden stated on Sunday, “It’s collective bargaining. I don’t believe in Taft-Hartley,” signaling that his administration will not step in to prevent the walkout, and potential supply disruptions and price spikes.

Retailers and trade associations, including the National Retail Federation, have urged the Biden administration to take action, fearing a severe impact on supply chains that could result in higher prices for consumers and a slowdown in business operations. Some companies have preemptively redirected shipments or increased stockpiles in anticipation of the strike.

With little time remaining before the strike begins, it remains uncertain whether the two sides can reach an agreement. If the strike proceeds as planned, it could leave a major dent in the U.S. economy at a critical time, with businesses and consumers left to bear the brunt of the disruption.