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Trade wars are good, and easy to win.  Really?

By Steve Geary | 07/09/2018 | 5:17 AM

A few months ago we wrote, “There is a storm rolling in.”  Well, it’s here.

We are now in a tariff battle with a long list of countries that includes China, Canada, Mexico, Germany, France, and India, among others.  Those six countries are among America’s top 10 trading partners, accounting for over 50% of our foreign trade.

“Trade wars are good, and easy to win,” according to President Trump

Trade wars are like bar brawls.  Nobody knows who will win.  Things get broken.  Everybody gets hurt.  It takes a long time to clean up.

Economists don’t agree with the President.  An opinion piece published earlier this year in MarketWatch nicely summarizes the opposing viewpoint. 

“It is a standard principle of economics that all individual actors exist within a system, any action taken by one actor will likely result in a response from others.  This means that wise governments, in considering which policies to adopt, must make difficult calculations about how their actions will interact with those of others.  ‘America First’ fails to make these calculations.”

The United States government has just ramped up on uncertainty for US business, and business hates uncertainty.  To paraphrase another senior government official named Donald from over a decade ago, there are known knowns, known unknowns, and unknown unknowns.  In my judgement, the known unknowns and unknown unknowns are now dominant.

Bring your key suppliers in and ask them how they are going to be impacted.  Call your top customers, and ask them if how they are impacted.  Draw a map of your supply chain, reaching out at least two levels, and see what it tells you.

Then start loading up the warehouse and keep your fingers crossed.

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About Steve Geary

Steve Geary

Steve Geary is an adjunct faculty member at the University of Tennessee's College of Business Administration, and is on the faculty at The Gordon Institute at Tufts University, where he teaches supply chain management. He is the President of the Supply Chain Visions family of companies, and Chief Operating Officer at ROSE Solutions, consultancies that work across the government sector. Steve is a contributing editor at DC Velocity, and editor-at-large for CSCMP's Supply Chain Quarterly. He is listed in Who's Who in America, Who's Who in the World, Who's Who in Science and Engineering, and Who's Who in Executives and Professionals. In November of 2007, Steve was recognized for "Selfless Service to Our Nation and the People of Iraq" by the Deputy Secretary of Defense.



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