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Ripple.

By Steve Geary | 07/23/2018 | 1:47 PM

It’s one thing to read about the macro-economic impact of tariffs.  It’s another when the micro-economic impacts ripple through the pond in the backyard.  Those tariff ripples are now rolling though our logistics networks.

It’s time to pay attention.

Jared is a short order cook at the neighborhood breakfast place four days a week.  On the days when he is not working at the restaurant, Jared works for a lobster wholesaler in Boston.  Jared is riding just one of the ripples flowing through the economy caused by the new tariffs.

In retaliation for the tariffs the US imposed, China has responded with tariffs on an array of American exports.  In particular, China hit American lobster imports with a 25% tariff.  Lobster prices are collapsing.  Those with a strong domestic customer base should surive, but some sort of realignment will take place.

This morning Jared shared that two of his wholesaler’s competitors have closed their doors since the tariffs went into effect.  Jared estimates that the volume at his wholesaler is off about two-thirds since the tariffs hit.  All of these companies were vulnerable, because China exports were a large chunk of their business.

Not every industry is losing.  For domestic steel manufacturers in the Midwest, unlike Jared, it’s a good thing.  Competitive imports are now more expensive, and presumably prices and profits for US steel producers will rise.

The point is that a new factor - higher tariffs - has been injected into the trade equation.  Discernable shifts, large and small, are rippling across the supply chain triggered by these new tariffs.  Some have been imposed by Washington, and some are retaliatory movesby our trading partners.  Across a slew of commodities, market equilibriums are shifting.

Right now, for most of us, it’s a new ripple emerging from the fog.  

What matters to us is that supply chain realignments and adjustments are underway. 

Are you seeing any ripples? Are they big enough to get your attention?  Scan the horizon within your network.  Is there something coming over the horizon worth your attention? Are you prepared to act if that wave becomes a tsunami across your supply chain? 

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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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