The New Anti-Trade Movement and Your Supply Chain – risk or opportunity?

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Since ancient times, trade deals have been struck with foreign countries. You could say that trade and tax were the spark that has ignited revolutions and wars.

The promise for the US to abandon the Trans-Pacific Partnership, coupled with the UK vote to leave the EU and change trade agreements across Europe, is raising concerns and signaling an anti-free trade sentiment. Free trade advocates are disappointed for sure and the future is uncertain.

The political climate has changed, bringing more focus on a reshoring movement in the US. Many of us in procurement were driven to support low cost country sourcing. Whether moving sources back to the US or with the potential of tariffs, duties and increased fees, our strategy and profit plans could be at risk.

While we don’t know what will evolve in terms of the future of trade, there are opportunities and risks. The opportunities will be presented if the US renegotiates trade deals to take advantage of the ability to drive US exports. The risks come if trade deals do not happen and increase costs to protect US manufacturing hurt the bottom line. I’m advising my clients to:

  1. Review all internationally sourced components
  2. Understand the strategic nature of all of the internationally sourced categories
  3. Identify opportunities for alternate sourcing
  4. Understand items with high capital investment and technology as a driver (and the implications of not being able to switch suppliers)
  5. Create a currency strategy
  6. Drive best value sourcing

It’s always better to be prepared than surprised.

What’s your plan?

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