Trump and the Supply Chain: Part 4

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New Year, New President… New Supply Chain?

By Paul Romano

Editor’s note: To coincide with the inauguration, Supply Chain World is running a series of articles from industry experts about how they expect the policies of the Trump administration to impact the supply chain. Read Part 1,  Part 2,  Part 3 and Part 5.

With any change in leadership comes various levels of risk and uncertainty. That fact has never been more apparent than this past year; when businessman, billionaire and reality TV star Donald J. Trump defied the odds and went on to win the general election. As the president takes office, anxieties and hopes are running high for those both for and against a Trump presidency. Politics is unchartered territory for the new commander in chief and many are wondering how his policies may affect global trade relations and ultimately, international supply chain operations.

Instead of simply waiting to see whether or not the global manufacturing community embraces Trump, smart supply chain executives are looking beyond all of the hype and color commentary, and are instead focusing on determining how this transition will impact their unique supply chains. Here are six things to consider as the transfer of power continues for America’s highest-ranking position.

A Continuation of the Current On-Shoring Trend

The on-shoring trend is already in full swing. With Trump’s focus on American manufacturing and a push to bring jobs back to the United States, companies could experience an increased risk and cost to off-shoring as well as building products overseas. Savvy supply chain managers are looking for and identifying ways to maximize a local presence stateside, while still maintaining a presence overseas.

The Relationship Between the United States and China

As the new administration settles in, our relationship with China will remain front and center. Both China and the United States rely heavily on one another, so supply chain executives can expect that the relationship between the two countries will remain strong well into Trump’s presidency. It is important for manufacturing professionals to formulate a plan on how to keep the lines of communication open with their Chinese counterparts. That being said, diversification to other geographies, and even on-shoring as a part of the portfolio, will certainly be an important part of a company’s global strategy under Trump’s leadership.

Changing Landscape of Trade Deals

Trump has promised that trade deals as we know them will change and these re-worked agreements may affect certain markets and geographies. While no one knows what these specific changes will be, supply chain managers are encouraged to look at areas covered by trade agreements in anticipation of potential change. Further, new markets may open up creating opportunities that will also need to be considered.

Complexity at the Border

As trade agreements evolve under Trump, supply chain executives can expect more complexity at the border. Moving goods across the border could be far more challenging than it has been in the past. Supply chain managers need to familiarize themselves with potential border bottlenecks for a smoother transition.

The Brexit Factor

While not specifically linked to a Trump Presidency, Brexit and changes in the EU could have a significant impact on the global supply chain. First, currency transactions could change, resulting in a move away from the Euro. Second, import and export could become even more costly and complicated than it currently is.

Supply Chain Disruptions

No matter who is commander in chief, risk will always exist in the supply chain. Experienced supply chain managers are always looking one step ahead in order to plan for disruptions caused by a number of factors, including natural disasters, end-of-life product, mergers and acquisitions and sheer demand that may produce economic ripples globally. Knowing where these disruptions could potentially occur can keep companies ahead of the curve.

While there is no crystal ball to help predict the future of the global supply chain, it is fair to assume that Trump’s promises to reinvigorate American manufacturing have already started to take shape and give us a preview of how manufacturing and global trade will look once he is officially sworn in. As the winds of change pick up speed for better or for worse, addressing these factors proactively will be the key to success in Trump’s supply chain.

Paul Romano is the COO of Fusion Worldwide, a leading global electronic components distributor that sources, stocks and delivers a broad range of products and finished goods to a wide spectrum of clients worldwide. Find Fusion Worldwide on Twitter at https://twitter.com/FusionFirst.

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