Rising tensions between key players such as the US, EU and China have recently led to increased concerns about a global trade war. Kevin O’Marah from community research platform Zero100 covers the most pressing business issues in Davos.
Geopolitical tensions have increased over the past year due to a number of major events as well as ongoing conflicts in the Middle East. elections in the usa., Germany or India.
The threat of a possible global tariff war has worsened in recent months after the EU imposed higher rates on Chinese imports. electric vehicles (AND) Due to growing concerns that the Chinese Government is subsidizing domestic manufacturers.
In response, China has retaliated with an anti-dumping investigation into EU brandy imports, while also investigating imports of pork and dairy products from the bloc.
Tariff tensions between the EU and the USA have also intensified and are expected to continue with the new American president coming to power. Trump has already expressed his dissatisfaction with the EU’s tariffs. imported food, cars and agricultural products by the United States. He also threatened to impose a general customs duty of between 10 percent and 20 percent on all imports from the EU when he took office.
Similarly, trade relations between the US and China are also weakening, mainly due to long-standing disputes over unfair trade practices, as well as China’s trade relations. intellectual property theft.
Kevin O’Marah, research director and co-founder of Zero100, a community research platform working towards neutral carbon emissions rates, sheds more light on how this is done Supply chains likely to be affected It depends on the changing business conditions and how they adapt to it. O’Marah will speak about the most pressing issues of global trade at this year’s World Economic Forum (WEF) in Davos, Switzerland.
How could an escalation of the global tariff war affect supply chains?
An escalation of the global trade war could cause various pandemic-like bottlenecks in supply chains, which could complicate and slow down supply chains. The cost of importing, exporting and transporting goods around the world can be much more expensive for consumers.
Manufacturers may be forced to look for new suppliers and customers and limit themselves to trading only within certain geopolitical blocsdepending on how far the tariffs go.
On how an intensification of the global tariff war could affect some countries supply chains O’Marah says: “An escalation of the US-China trade war will likely isolate critical parts of certain strategic supply chains, such as electric vehicles, solar power and solar power. This will impact the entire industry as companies in these value chains need to invest domestically to maintain reliable supplies.” “It will increase costs for countries.”
O’Marah adds: “The situation will get worse if retaliatory tariffs and other industrial measures intensify. However, Isolated actors such as the United Kingdom, may benefit paradoxically, as excess capacity in certain places, particularly China, can lead to oversupply of certain materials, such as nickel, or components, such as semiconductors. Suppliers with excess capacity, such as China-based manufacturers, may be forced to sell their products to third countries at low prices. This may help some industries that use these materials and components, but harming suppliers from the same materials”.
It’s not all negative, the expert warns: “Trump’s tariffs could be a blessing in disguise if they encourage supply chain leaders around the world.” Localize or at least regionalize supply chains. The benefit of this change is to enable supply chains around the world that are more resilient but also provide a lower carbon footprint. instead of sourcing globally “As has been the norm during 30 years of globalization led by the United States and China.”
How are companies preparing to manage their supply chains?
Many companies are preparing their teams to better handle supply chain issues by investing in training, improving communication with suppliers and customers, and re-evaluating current supply chain designs. Predictive analysis tools The supply chain also contributed to this issue.
As for how companies are building more resilient teams to better guide supply chain policies, O’Marah says, “Most companies have developed the ability to create ‘what if’ models much more quickly than what might occur in the event of a particular tariff. Your supply chain planning tools and rapid problem-solving teams. “They have improved a lot after the COVID-19 crisis.”
The expert warns that the trade struggle against China may have prepared world trade in advance for this new scenario: “Diversifying supply sources outside of China“This particular situation has been going on for years and frankly most global companies are well prepared to deal with a volatile tariff environment.”
How are artificial intelligence (AI) and robotics transforming supply chains?
Artificial intelligence and robotics have come a long way in helping supply chains improve their operational efficiency and reduce physical workload. These can help predict demand in real time To enable companies to manage their stocks better.
ADVERTReferring to how artificial intelligence and robotics are transforming supply chains, O’Marah states: ” 100% digital supply chains “These will allow companies to be much more responsive and agile in managing tariffs, improving their effectiveness and possibly leading to wider use of trade restrictions, industrial policy and other forms of tariffs.”
The Economist concludes: “Supply chain leaders are focusing on how AI moves from the phase of piloting and experimentation to deployment at scale. Major profitability depends on radically increasing productivity To address the labor shortage and rising costs“.
