Although tariffs are increasingly used as a political tool, their effectiveness remains a topic of debate. In a recent interview, Sina Golara, an assistant professor at Georgia State University and co-author of a book about the effects of tariffs on the supply chain, stated that that tariffs can create unintended consequences. He noted they can “lead to an increased political risk, supply uncertainty, a threat of retaliatory tariffs and the inability of politicians to optimally select a tariff rate and maintain it.”
Golara noted that, in the case of the interwoven economies of the United States and China, tariffs become even more difficult to manage successfully.
Looming Tariff Threats for 2025
President-elect Trump has indicated a willingness to implement aggressive tariff policies when he takes office in January. CNBC reports that Trump threatened the BRIC alliance (Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran and the United Arab Emirates) with a 100% tariff if they try to devalue the U.S. dollar.
Given the large scale of Trump’s proposed tariffs, there is fear of economic harm. A recent Associated Press articles states: “The cost of those taxes would likely be borne by U.S. families, importers and domestic and foreign companies in the form of higher prices or lower profits.”
Prepare Now for Increased Tariffs
To minimize supply chain disruptions a recent Forbes article advises companies to take a proactive approach to the looming tariff crisis. Among the strategies recommended are:
• Seek alternative suppliers: Establishing multiple suppliers in multiple regions can help safeguard your supply chain.
• Stockpile inventory cautiously: Build reserves, but weigh the risks of aging inventory carefully.
• Diversify production locations: Shift operations to regions with fewer trade barriers.
• Offset costs: Explore ways to create operational efficiencies and adjust pricing strategies.
The escalating deployment of tariffs has added significant complexity – and worry – for global supply chain managers. To safeguard supply chains for the future, companies must remain agile and proactive.
