East Coast and Gulf Coast port workers are on the cusp of striking—a move that could cause serious economic fallout. Just a one-week strike could cost the US economy $3.78 billion (i.e., $540 million per day). 

That's according to an analysis by The Conference Board, which examines the implications of a strike by port workers, whose union contracts are set to expire September 30. As the study reveals, the stakes are high:

• There are a combined 36 East and Gulf Coast ports, which handle 57% of US container volume.

• Together, these facilities handle a quarter of US annual international trade—about $3 trillion.

• Leading products to be affected include electronics and automobiles.

A strike would come at a critical time in the US. The deadline for reaching a deal falls just weeks before the November elections. Moreover, a strike would occur as retailers scramble to finish importing inventory to ensure customers are well supplied ahead of the busy holiday shopping season.

"A port strike would paralyze US trade and raise prices at a time when consumers and businesses are starting to feel relief from inflation," said Erin McLaughlin, Senior Economist at The Conference Board. "There's no easy Plan B. While shippers have already begun diverting some cargo to the West Coast, capacity for such alternative options are limited."

Additional insights from the analysis include:

The economic impacts of a potential strike are extensive. The costs compound the longer it lasts:

• Even a short port strike could cause supply chain interruptions for weeks. For example, a one-week strike starting October 1 could cause slowdowns through mid-November.    

The US Administration can legally intervene to force striking port workers back on the job, but election-year politics introduces a more complex calculus:

• Under the Taft-Hartley Act, the President can seek a court injunction that triggers a back-to-work order and 80-day cooling-off period if a strike of essential workers affects national security.

• The Administration has stated it has no plans to invoke Taft-Hartley, due to its support of unions and collective bargaining. Since the 1970s, it has been used only once to end a work stoppage (a 2002 lockout at 29 West Coast ports).

Automation and wages are key sticking points in negotiations:

• East and Gulf Coast port workers are seeking protection against rising automation. The International Longshoremen's Association (ILA) said terminal operators have been found using autonomous systems to process trucks without ILA labor, which violates the current contract.

• Wage increases of more than 70% are on the table. Under the ILA's expiring contract signed six years ago, East and Gulf Coast port workers are now earning notably less than what their West Coast counterpoints secured in renegotiations last year.