There is a storm rolling in

If you work in logistics, you understand compliance.  The government sets the rules, and we figure out how to follow them.  OSHA rules.  Labor standards.  Tariffs.  Gas taxes.  The list goes on.

We know how to project these costs, know how to plan for these costs, and know how to run a business incorporating these costs.

President Trump has now introduced uncertainty, announcing tariffs on aluminum and steel.  And while he began with steel and aluminum, he quickly escalated the rhetoric to include a threat of tariffs on European autos.  Our trading partners have not been silent.  Europe is talking about Tennessee whiskey and Harley Davidson.

To make it messier, the President has added unpredictability to the uncertainty.  Canada and Mexico are exempted, but what about Australia.  There is confusion over Australia.  Who knows who else is knocking on the door of the White House.

These ten countries account for about two-thirds of our steel imports:

1. Canada 16.7%
2. Brazil 13.2%
3. South Korea  9.7%
4. Mexico 9.4%
5. Russia 8.1%
6. Turkey 5.6%
7. Japan 4.9%
8. Germany 3.7%
9. Taiwan 3.2%
10. China 2.9%

Source:  Reuters

What is the President up to?  Why steel?  Why aluminum?  What next?  Just about a year ago I wrote, “Uncertainty Stinks.”  Then last fall, I followed up with “Interesting times.”  The time for conjecture is over; there is a storm rolling in.

Tariffs and retaliatory tariffs are in play, and they will ripple across the supply chain.  Depending on your exposure, you may have a blip to deal with, or you may have to do a complete logistics and sourcing reset. 

Even worse, any hope for precision is out the window because we do not know broad the impact will be.  Is it just steel and aluminum, or did we just see the start of a global trade war?  Are we reacting to a ripple, or will it be a tsunami? 

My advice for logisticians: plan for the worst, hope for the best, and start running for the high ground.