After imposing tariffs on a high volume of imports from China earlier this year, the Trump administration this week announced two major changes in its trade war with China: (1) that the US would apply tariffs to $200 billion worth of goods imported from China, and (2) that the tariff rate on goods imported from China (including the newly selected goods as well as the $50 billion worth of goods that were already subject to tariffs) would rise from 10% to 25% at the end of the year.
In normal circumstances, what does a typical procurement professional do when the cost of goods from a supplier is earmarked to rise by 25%? Find another supplier, right?
So, by imposing these hefty tariffs, what President Trump wants American procurement professionals to do is to stop buying from Chinese suppliers and to buy from American suppliers instead.
Have you re-sourced your Chinese spend?
If not, have you at least begun looking at non-Chinese suppliers?
Do this week’s changes prompt you into action or quicker action? (I mean a 25% price hike can be pretty darn major)
Or, is there any part of you that feels that this whole U.S.-China trade war will be over as quickly as it started and you’ll be buying from China next year just as abundantly as you were buying from China in 2017?
Regardless of your political leanings, you have to admit that the Trump administration’s actions have created a lot of uncertainty, risks and challenges in the procurement world. And one thing is clear: Now is not the time to let procurement run on auto-pilot.
You better be paying attention.
One last thought on my part. Businesses in the U.S. economy are already extremely busy. If there is a massive reshoring effort to come, it’s better to be on the leading edge of the wave than behind it. There isn’t exactly an excess of U.S. supply base capacity available and the early bird will capture that worm.