Will he or won’t he?
Well, he did.
This past weekend, the Trump administration announced 25% tariffs on goods from Mexico and Canada, and 10% on goods from China, which will begin on February 4th. In addition, Canada will no longer be allowed the de minimis U.S. duty exemption for shipments under $800.
There are countless emails in my inbox this morning about this news, and countless posts on my LinkedIn feed about it too, with various analysts and pundits slicing and dicing the meaning and impact of it all.
This shouldn’t come as a surprise. The threat of a tariff war was known well before the U.S. presidential election, and it became almost a certainty once Donald Trump was re-elected in November. “Since the re-election of Donald Trump as U.S. president, he has been threatening to impose tariffs on goods from China, Mexico, Canada, the EU, and everywhere else,” I wrote back on December 6th under the heading, “A Tariff for You, and a Tariff for You, and a Tariff for You Too.”
So, here we are. Will these tariffs actually go into effect tomorrow as announced, or will they be withdrawn or delayed, as Trump did with the 25% tariffs he threatened to impose on goods from Columbia then backed off once the country agreed to accept deported migrants?
You just never know.
Which, I believe, is the perfect tagline for Supply Chain Management. It’s risky, it’s dynamic, and it’s a bit (or a lot) unpredictable.
“What can businesses do to help maintain strong supply chains, despite the unpredictability and the volatility in a global supply chain?”
I was asked that question by Richard Howells from SAP on his “The Future of Supply Chain” podcast last month. Here was my response (edited for conciseness):
Well, the number one thing when you have an environment that’s so dynamic, so unpredictable, and so volatile, is to stay informed. The good thing is that we have so much more visibility and sources of information today than ever before. Obviously, with social media, television, newsletters, and podcasts like this, there’s a variety of different avenues companies have to keep a pulse on what’s happening in the industry, whether it’s on the regulatory front or even with market data, such as what’s happening with real-time trucking rates. So, the number one thing is staying informed across all fronts that can impact your supply chain and logistics operations.
The second thing I always tell companies, and this is something that relatively few companies have successfully done because it takes a lot of time and effort, is to map your supply chain. To this day, a lot of companies really don’t have good visibility beyond their Tier 1 suppliers. And what we’ve seen time and time again is that not fully understanding the end-to-end nature of your supply chain poses a variety of different risks. It also limits your ability to drive productivity across your supply chain and your ability to comply with regulations [like CO2 emissions reporting and forced labor compliance]. So, understanding, who are all my suppliers and who are their suppliers and who are their suppliers? Where are those manufacturing facilities located? In what countries? And what are some of the potential risks in those countries — from a labor standpoint, an environmental standpoint? The more visibility you have to that, I think you’re going to be in a better position to plan effectively, respond effectively to whatever happens. But right now, a lot of companies are constrained because they just don’t know.
Once you’re able to map your supply chain, then the next step is to model and simulate “What if?” scenarios. Because the more upfront homework you can do by asking questions like “What if there is a port strike?” or “What if a war breaks out between China and Taiwan?” — and doing so well in advance of those things potentially happening — the better prepared you will be to respond effectively.
There are so many different “What if?” questions you can ask, and each industry and company will have their own, but if you’re able to create a digital twin of your supply chain, then you can model and simulate a lot of these capabilities. You can come up with playbooks to say, “If this happens, then these are some of the things we ought to look at doing, or some of the decisions we should consider taking.” It’s not going to be perfect, but at least you’re maybe 70% of the way there, 80% of the way there, and you’ve got a head start versus companies that are completely caught flat footed and have no idea what to do.”
Richard and I covered a lot more ground during our conversation on what’s happening in the world of supply chain and logistics, including segments on Artificial Intelligence (of course), transportation management systems (TMS), and business networks. Therefore, I encourage you to listen to the full episode (“The Outlook for Logistics for 2025 and Beyond with Adelante SCM’s Adrian Gonzalez”) for everything Richard and I had to say on those topics and more.
Back to Trump and tariffs. What’s next? Will he or won’t he impose tariffs on EU countries?
Maybe, maybe not. You just never know with Trump.
And you just never know what’s next in supply chain management.
