Over the past several months, consumers and supply chain professionals alike have been worried and waiting for President Trump’s final decision on his tariff policy. After a rocky rollout, new tariffs on foreign goods — some unexpectedly even for importers — are now broadly in effect worldwide.
A major new tariff that went into effect this week is a 50% levy on steel and aluminum. Butter knives, baby strollers, spray deodorants and fire extinguishers — once deemed derivative products and thus exempt from the targeted tax — are now considered part of the 407 categories of goods subject to the higher rate, reports CNN. Importers now face a difficult choice: They can absorb the added costs or pass them on customers. Of course, taking on a tariff as high as 50% is a near-impossible burden.
This latest round of tariffs is a signal that tougher economic times are just ahead, suggests The Wall Street Journal: “As more countries release figures for economic growth that cover the second quarter of this year, a clear pattern has emerged. Those that grew rapidly in the first quarter as U.S. businesses raced to build up inventories ahead of higher tariffs slowed in the second quarter as those duties were imposed.”
So far, most countries have avoided implementing countermeasures against Trump’s tariffs, which has been beneficial to the global economy — and the United States. But it will take some time “before the impact of tariff increases that are already settled is clear, and it is likely that further increases in duties will add to the damage,” The Journal continues. Still, the World Trade Organization is now predicting that global trade will expand by 0.9% this year, versus the decrease of 0.2% it previously forecast, mostly based on American importers rushing to bring in goods before tariffs went into effect.
For its part, Home Depot plans to raise prices to match the higher costs created by tariffs, reversing an earlier commitment to keeping prices steady. There’s a weaker demand for DIY currently, so the retailer is aiming to attract business from contractors and professional builders instead. Notably, leaders at the home-improvement giant say they are also accelerating supply chain diversification.
Another article in The Journal notes that jewelry company Pandora has a similar plan, which includes “diversifying its supply chain and shipping jewelry directly to Canada and Latin America, bypassing its U.S. distribution center,” as well as raising prices and cutting costs. Currently, Pandora makes most of its products in Thailand — now subject to a 19% reciprocal tariff.
Diversification isn’t the only way to navigate uncertainty. Despite the headaches caused by low inventories during the pandemic and the rush to beat the tariffs at the outset of the year, just-in-time inventory management is back, per Reuters, but this time with a twist: artificial intelligence. The chief supply-chain manager of U.S. lawnmower maker The Toro Company says he “uses AI to digest the daily stream of news that could affect Toro's business… [and] generative AI to sieve an ocean of data and to suggest when and how many components to buy from whom.”
Representatives from SAP, Oracle, Coupa, Microsoft and Blue Yonder all report strong growth for generative AI solutions for supply chains, and supply chain consultancy GEP says that the volatility of Trump’s tariffs are helping drive demand.
More CHAINge on the horizon
Of course, even with the best AI, “humans still need to make strategic and big tactical decisions,” Reuters states. And CHAINge North America, September 9-10 in Columbus, is where you and your team can develop these essential skills. Check out educational sessions including Harnessing AI in Supply Chain: A Structured Roadmap with SCOR. You’ll discover how to ensure critical standardization with the industry-leading SCOR framework, produce and implement effective roadmaps, and use AI to optimize supply chain operations and boost competitive advantages. Register today!
