It’s not just China that has the global retail community on edge – the administration has also proposed tariffs on imported goods from Russia and Brazil, trade relations with the EU are in flux, and let’s not forget about Nafta. As global trade continues to evolve, the actual costs for retailers around the world are just now coming to light.
The Trump administration has imposed $105 billion of import taxes across these main trade blocs thus far, and retaliation has been tit-for-tat, bringing the total hit on the U.S. economy to $210 billion according to recent estimates. If the U.S. continues to follow through on recently proposed tariffs for import duties, the potential impact could be closer to $655 billion.
Depending how you look at it, the worsening trade tensions are either good news for each country’s stocks or are holding back innovation worldwide. In China alone, tariffs affect more than 800 products, including industrial machinery, medical devices and auto parts. For most of this year, China has had one of the world’s worst performing major stock markets, with shares slumping more than 20 percent since a peak in late January. This news has helped push the country to accelerate its reform agenda, which may include opening up the financial sector to foreign investors.
Many international retailers are taking the trade war as a challenge. If the price of American goods grows too high, they can look to other options in Europe or Asia to buy and sell instead. For many retailers, the priority remains quality, price and consumer satisfaction, which requires an efficient evaluation of all options across the globe to ensure they are getting the best deals from manufacturers, suppliers and other partners in the retail community.
In other countries, including Canada, businesses are facing the collateral damage of escalating trade wars. Even if not under direct threat themselves, retailers around the world are feeling the effects of tariffs and trade limitations due to a reliance on American and Chinese products. As additional tariffs are imposed on a broader range of Chinese goods, fewer Chinese products will land in the U.S. and will instead head to other markets. Even if only some parts of a product originate in China, American customs officials can declare the finished product to be of Chinese origin – limiting what can be imported across Canadian borders, even if made within the country.
With tensions rising between countries, retailers around the world need to find a way to ensure their product development process runs smoothly and they have full visibility into their supply chain. An integrated global trade management (GTM) platform with deep regulatory and country-specific intelligence can allow retailers to automate all aspects of GTM and purchase-to-pay (P2P) – from progressive purchase orders to quality control and supplier compliance to finance, logistics and supply chain visibility. This type of digital solution houses everything in one place, so suppliers can create accurate invoices and error-free packing lists, finance organizations can trust payment processing and retailers can more easily tap their community for information and feedback, resulting in a better end product, faster.
As global trade becomes more complicated, communication is crucial for retailers to stay ahead of changing tariffs and regulations. GTM is a complicated process with numerous parties involved and multiple moving parts to track, made all the more difficult when stuck using manual processes. Retailers can’t afford to operate on multiple platforms, especially in the face of global uncertainty. Instead, the industry needs the ability to manage everything in one place, from regulatory requirements and customs compliance to financial and logistics information. A unified platform provides the necessary visibility into quality control, supplier compliance, import and export, supply chain, customs, and finance all in one place. With a comprehensive GTM platform that seamlessly connects retailers, suppliers, financial parties and other industry players, the global community will be better prepared to adapt to any upcoming changes in international trade.
A fully integrated GTM platform will help retailers minimize order misalignments and disruptions, increase speed in the product development cycle, simplify information flow for more advanced decision making and automate business logic to increase transactional efficiency. With a single source of truth, retailers can increase the overall efficiency and agility of their supply chains by working directly with suppliers, freight forwarders, carriers, customs brokers, financial organizations and logistics and compliance firms. A single unified view of all the information across the retail supply chain, combined with deep regulatory intelligence, can provide retailers with a worldwide, centralized view of the industry that will mitigate risk in the long run.
Global supply chains continue to feel the effects of Trump’s trade wars. Read our blog to find out how retailers are mitigating the effects of the shifting trade landscape.