How Circularity Helps Companies Navigate Trade Tariffs
Jon Hughes, Olaf Schatterman, and Jason Smith
The U.S. administration’s rapidly shifting trade tariffs and other countries’ responses have shocked global supply chains. These tariffs are likely to impose significant costs on companies that rely on overseas production and multi-national supplier networks. Because tariffs apply at the point of entry, they increase the cost of goods immediately, impacting margins, pricing, and competitiveness. For many firms, these added costs cannot be passed on to customers, especially in price-sensitive markets.
The Fragility of Global Supply Chains
Over the past few decades, globalisation and technological advancements have enabled companies to build supply chains that span the globe. Today’s supply chains are intricate, interconnected webs designed for efficiency, specialization, cost savings, and improving overall competitiveness. For example, components might be sourced from China, assembled in Mexico, and sold in the U.S.
Long, multi-tiered supply chains are inherently susceptible to disruptions. The efficiency—and complexity—of these systems comes at a cost: fragility. A flood in Southeast Asia can delay shipments of critical components. A pandemic can grind manufacturing hubs to a halt. A single policy decision—such as a new tariff—can sharply increase costs and upend supplier relationships. The challenge for companies is navigating such external shocks and keeping them from disrupting business operations or threatening profitability. All this makes resilience just as important as efficiency.
In the current environment, the question facing business leaders is clear: What must my business do now to mitigate the impact of tariffs while building a more resilient, sustainable supply chain for the future? To read the entire article, click here!
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