What the US-EU trade deal means for businesses

Sighs of relief will be echoing round board rooms across Europe & the US. Undoubtedly these tariffs are lower than originally feared and will likely prove manageable for most firms. EU carmakers, for example, are waking up to a 15% US tariff, rather than the 25% rate that was introduced in April. Major obstacles, however, remain in place that will reshape EU domestic industry – the endurance of the 50% US tariff on EU steel and aluminium is a major blow.

Many firms in the most exposed sectors like automotive, steel and technology should have been contingency planning for months. We’ve seen a marked increase in the use of scenario planning to model different pathways to the future. Firms have focused on fundamentals, weighing up costs and operational risks in supply chains to try to minimize their tariff burden. This approach has enabled a more holistic look at how to recalibrate supply chains, with firms now better equipped to rebalance their exposure to the US market – this could continue in the next 3-6 months.

The most effective move supply chain leaders can make now is to deepen their understanding of their networks. That means improving visibility, responsiveness and precision across multiple tiers. In recent years, many organisations have made significant strides in improving upstream visibility through the use of advanced software tools and more streamlined supplier communication. As a result, businesses now have access to better planning capabilities and more agile response mechanisms than ever before. For companies that haven’t yet built that capability, gaining a clear picture beyond direct suppliers should now be the number one priority.