How circularity helps companies navigate commercial tariffs
Jon Hughes” Olaf Treasury” and Jason Smith
Commercial rates that quickly change from the US administration and the responses of other countries have shocked global supply chains. These tariffs are likely to impose significant costs to companies that depend on production abroad and multinational suppliers. Because tariffs apply at the entry point, the cost of goods increases immediately, affecting margins, prices and competitiveness. For many companies, these additional costs cannot be transmitted to the client, especially in prices -sensitive markets.
The fragility of global supply chains
Around the last decades, globalization and technological advances have allowed companies to build supply chains that cover the world. Today’s supply chains are intricate and interconnected networks designed for efficiency, specializationCost savings and improvement of general competitiveness. For example, components can be obtained from China, gather in Mexico and sell in the US.
Long and multiple levels of supply chains are inherently susceptible to interruptions. Efficiency and complexity, or these systems have a cost: fragility. An flood in Southeast Asia can delay shipments of critical components. A pandemic can stop manufacturing centers. A single policy decision, such as a new rate, sharply increases the costs and relations of suppliers. The challenge for companies is to navigate such external shocks and prevent commercial operations from interrupting or threatening profitability. All this makes resilience as important as efficiency.
In the current environment, the question faced by business leaders is clear: What should my business do now to mitigate the impact of rates while building a more resistant and sustainable supply chain for the future?
