Trump’s plans and what we can do to secure supply

The political landscape is shifting with Donald Trump’s recent election, which could significantly change trade flows and disrupt global supply chains. The anticipated policies of the Trump administration raise questions about trade dynamics, the resilience of supply chains, the future competitiveness of the US, the position of Europe and other US allies, and the security of supply.

The interconnectedness of global manufacturing and trade networks defines today’s economy. The US’s reduced dependence on Chinese imports contrasts with the EU’s increasing reliance on Chinese goods, highlighting divergent strategies in global supply chains. Anticipated tariff policies under Trump’s administration could further reshape trade relations. However, research indicates that international procurement and supply networks remain robust despite challenges.

Previous tariffs and the covid pandemic have accelerated the trend toward reshoring—relocating production closer to home. Some companies had already begun diversifying their supply chains away from China before Trump’s election, viewing this diversification as a strategy to build a competitive edge rather than a direct reaction to political changes.

Zara’s parent company, Inditex has leveraged nearshoring by manufacturing about 10% of its clothing in nearby countries like Morocco and Turkey. This proximity enables Zara to quickly respond to changing fashion trends and manage inventory effectively, minimising overproduction and waste. The company’s ability to adapt swiftly to market demands has been a key factor in its success

Proposed tariffs of 10% to 60% on imports from various countries, particularly China, could significantly affect industries reliant on cross-border trade. Trump’s ‘America First’ policy may encourage nearshoring or onshoring manufacturing operations, prompting companies to adapt sourcing strategies.

A potential 25% tariff on imports from Canada and Mexico could significantly disrupt North American supply chains. Industries reliant on cross-border trade, such as agriculture and automotive, may face price hikes for essential goods like avocados and beef.

Trump’s proposed tariffs, particularly the high rates (up to 60%) aimed at China, may compel the EU to strengthen its trade ties with China. Japan and South Korea are also likely to react strategically to the US-imposed tariffs, which could foster stronger relations with the EU.

Supply chain networks vary greatly from sector to sector and company to company. Organisations can prepare for changes and potential volatility, disruptions, and shocks by ensuring resilient operations and monitoring regulatory developments while analysing the impact of what we know. The following is recommended.

Despite proactive measures, certain factors remain unpredictable. Leadership changes can lead to abrupt policy shifts that disrupt established supply chains. Broader economic factors—including inflation rates and geopolitical tensions—are often beyond individual companies’ control but can significantly impact operations.

Companies must constantly monitor their ecosystem and discuss the implications of developments and changes. Scenario planning allows organisations to structure ongoing strategic reflections and discussions to map out probable pathways in preparation for swift responses. Identifying potential opportunities and risks associated with different scenarios is critical for developing robust strategies and contingency plans.

The evolving political landscape presents both challenges and opportunities for supply chains. Companies can enhance their resilience and adaptability by adopting scenario planning and leveraging advanced visibility tools. Collaboration is another critical resilience factor. With proactive measures in place, productive relations with partners, and continuous strategic discussions, businesses can navigate uncertainties while improving competitiveness in a dynamic market environment.

The road ahead may be fraught with challenges. Still, strategic foresight, deeper insights, and close collaboration will be key drivers of success amidst evolving political dynamics and rougher economic conditions in a more demanding business environment. Luckily, supply chain managers are experienced problem-solvers and ecosystem-builders who have demonstrated their ability to keep goods going despite an ongoing trade war, a global pandemic, and the Red Sea crisis.