I DON’T NORMALLY get into political discussions
in this publication, but one topic that kept coming to the fore during the U.S. presidential campaign and after the election is directly relevant to
supply chain managers and therefore merits some
attention. Let me say up front that the following
represents my personal opinion.
That topic is international trade and globalization. Very few businesses today are completely
untouched by international trade. Even those
that make their products in their home country
often import some of the materials that go into
those products. Moreover, in countries (like the
U.S.) where retail and consumer consumption
are significant contributors to economic activity,
imports play an outsized role, as a look at the
“Made In” labels in any retail store will attest.
That’s why many companies and industry organizations are gearing up to talk back to the Trump
administration on trade. The president’s stated
desire to bring more manufacturing back to the
United States is an admirable goal … but not
if it’s at the expense of international trade. His
rhetoric makes it clear that he considers imports
to be intrinsically bad and local manufacturing
and exports to be good. Any legislative or tax-re-gime changes that come about as a result of such
an uninformed and simplistic view could wreak
economic havoc. Instead, the administration and
Congress should be looking for ways to increase
exports without upsetting an economic system
that on balance has proven beneficial.
In his most recent “Monetary Matters” column
in this magazine, Dr. Chris G. Christopher Jr.
of the research and consulting firm IHS Markit
explained some of the risks associ-
ated with the backlash against trade
and globalization that’s gathering
steam not only in the U.S. but
also across Europe. While it’s
easy to understand anxiet-
ies about trade and global-
ization, he said, resistance
to them is “misguided.”
“[E]fforts to limit globaliza-
tion—through such means as
protectionist tariffs—both raise
prices and damage the competi-
tiveness of domestic industries that
import raw materials,” he wrote.
Instead of focusing on globalization
itself, Christopher continues, more
attention should be paid to helping
those hurt by it. Increasing access
to higher education and job training, expanding wage insurance
programs, and adjusting income
tax policies are just some of the
ways that could be done, he suggests.
The economics of international
trade are complex and, as we’ve seen, subject to
vastly different interpretations. The opinions of
those newly in power and the policy decisions
they inspire have the potential to significantly
impact the supply chains of manufacturers, retailers, importers, and exporters. As was demonstrated by the president’s interference in Carrier
Corporation’s plans to relocate a plant from
Indiana to Mexico, that can happen with little
warning. No matter what your political leanings
or feelings about trade policy and globalization
may be, some “what if” scenario planning might
be in order.
[TOBY GOOLEY, EDITOR]
The opinions of those newly in
power and the policy decisions they
inspire have the potential to
significantly impact supply chains.
Time for some scenario planning?