Can the Trump Train Derail the Global Supply Chain?

Can the Trump Train Derail the Global Supply Chain?

Will Trump govern as he campaigned, or will his administration end up forming policies that are somewhat more moderate in impact?

With the release of my new book entitled “Lean and Technology: Working Hand in Hand to Enable and Energize Your Global Supply Chain” and the shocking election of Donald Trump as President of the United States, I started thinking of the potential impact of his election on our global supply chain.

Besides his sometimes racist, misogynist and other assorted nasty comments during the campaign, Trump ran on a populist, nationalist and protectionist platform to “make America great again” with goals such as renegotiating and cancelling trade deals and trying to bring the manufacturing of items like cars and air conditioners home again.

The potential impact of this would most likely be trade wars, rising prices of supplies and consumer products, longer lead times and higher manufacturing costs (if in fact many items we now buy overseas could even be manufactured with any efficiency here again).

If trade deals such as NAFTA are in jeopardy and we withdraw from Trans-Pacific Partnership and label China a “trade manipulator,” not only will costs rise, but inventory could very well get stalled around the globe, lengthening lead times as it takes longer to get products to the U.S. This will certainly raise risk in operating a global supply chain since the global economy is still struggling from the 2007 financial meltdown and resulting global recession and the last thing it needs is another shock to the system like this. It will also most likely impact our exports as well as protectionism will probably rise around the world to some degree.

Ultimately, this could lead to significant inflation as prices rise for goods (either imported or manufactured here), greater unemployment and excess capacity, at the very least, in the international transportation industry (and possibly other industries such as retail as prices rise).

On a somewhat positive side, it would probably drive more nearshoring or increased investments in U.S. and some regional supply chain capabilities.

So I guess the ultimate question is: Will Trump govern as he campaigned, or will his administration end up forming policies that are somewhere in between, since as someone who prides himself as a great negotiator, he (hopefully) is leading with an extreme position hoping to get a better deal.

No matter, one thing is for sure… businesses will need to adjust their supply chain strategies accordingly to deal with it as efficiently as possible and there will be an even greater need for a flexible, agile supply chain.

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