Case study: The Impact of US-China Trade Wars on Supply Chains

Overview The US-China trade war has significantly disrupted global supply chains, leading to increased costs, strategic shifts, and challenges in international trade. Businesses worldwide have been compelled to adapt by diversifying suppliers, reassessing manufacturing hubs, and mitigating tariff risks.

The ongoing US-China trade tensions have significantly impacted global businesses, leading to strategic shifts and adaptations. For instance, major companies like Pernod Ricard and Carlsberg are reporting continued struggles in China, forecasting no immediate recovery in consumer demand. In response to new tariffs, companies such as Temu are promoting “local” products to mitigate the effects of policy changes. Additionally, US tech firms are caught up in tariff disputes, facing challenges in both China and the European Union. These developments underscore the complex landscape global businesses must navigate amid geopolitical shifts.

Key Effects on Supply Chains

Increased Costs Tariffs imposed by both countries have raised costs for raw materials and finished goods, forcing businesses to adjust pricing or absorb losses.

Supply Chain Diversification Companies have sought to mitigate risks by relocating production to other countries like Vietnam, Thailand, and India, reducing dependence on China.

Operational Delays Trade restrictions and regulatory changes have created delays in logistics and customs clearance, impacting production schedules.

Technological Realignment The trade war has heightened tensions over technology exports, prompting businesses to reassess partnerships and intellectual property protection.

Conclusion The US-China trade war highlights the importance of building resilient, flexible supply chains to navigate geopolitical uncertainties. Businesses must continue to innovate and adapt to remain competitive in a rapidly changing global landscape.