How will the new China tariffs impact the supply chain?

Alan Gunner, Business Development Director, Adjuno explores what changes retailers should make to their supply chain to keep up with the ever-changing trade agreements following the news that President Trump has decided to move forward with a 10% tariff on an additional $200bn worth of goods from China,.

“The trade wars between the US and China are ramping up. And with President Trump placing a 10% tariff on an additional $200bn worth of goods from China, this country’s role within the global supply chain is weakening by the day. It’s no longer a low-cost environment and it is clear that there is now growing pressure to move away from a China-centric supply chain model, as more retailers and customers across the globe feel the brunt of this decision. 

But this is not a simple shift: moving sourcing away from China will have significant implications for the whole supply chain. There is not a single location that can replicate the depth of production options available in China: instead companies will by default end up with more and more locations, not just across the US but in other countries. Therefore organisations will need to ensure the right controls are in place, supported by real-time insight, to minimise any customer impact as a result of change. By delivering even more detailed location and performance data, retailers will be able to achieve new levels of agility and responsiveness. And to do this organisations need the right tools: by implementing new technologies and facilitating better relationships with their suppliers, retailers will be able to achieve greater levels of insight into the supply chain, driving the continual improvements needed to explore and exploit new markets. Resilience is fast becoming a priority and it is this full visibility of the supply chain that will enable retailers to keep up with the ever-changing trade agreements. 

The fact is that as the tensions between America and China continue to grow, China will become less and less attractive as a sourcing location and the rising trade wars will further push retailers to drastically rethink their supply chain operations. But it is those organisations who embrace this change and add intelligence to their decision making who will be best placed to minimise any risk of customer disruption and plan for a very different, very profitable, future.”