Escalating Geopolitical Tensions
Rising tensions between the world’s key players are creating a growing concern of a global trade war. According to Kevin O’Marah, chief research officer and co-founder of Zero100, a community research platform working towards zero carbon, the current situation is precarious, especially for Europe. As O’Marah prepares to speak at the World Economic Forum (WEF) in Davos, Switzerland this year, the stage seems set for a complex and far-reaching trade conflict that would leave no country unscathed.
Trade Wars and Tariffs: A Complex Web
Recent months have seen escalating trade tensions between key players. The EU imposed increased tariffs on Chinese electric vehicle imports, prompting China to retaliate with an anti-dumping investigation into brandy imports from the EU, as well as probing pork and dairy imports from the bloc. Meanwhile, US president Donald Trump has expressed his discontent regarding EU tariffs on food, cars, and agricultural products, threatening to impose a blanket tariff ranging between 10% and 20% on all imports from the EU when he comes into office. The global trade landscape is becoming increasingly treacherous, and Europe is at risk of being caught in the crossfire.
Supply Chain Risks: A Growing Concern
An escalating global trade war could cause several supply chain backlogs, leading to complications and slow transportation of goods. The cost of importing, exporting, and transporting goods across the world could become much more expensive, resulting in higher product costs for consumers. Manufacturers might be forced to find new suppliers and customers, as well as limit their trading activities to certain geopolitical blocs, depending on the extent of the tariffs. Europe’s already fragile supply chains are at risk of being severely disrupted by such a global trade war.
Companies Prepare for the Worst
To mitigate the risks, companies have begun investing in training, improving supplier and customer communications, and re-evaluating their current supply chain designs. Predictive supply chain analysis tools have helped companies scenario model the impact of potential tariffs and prepare their teams for quick problem-solving. While companies have diversified their supply chain sources away from China in recent years, a volatile tariff environment may still require them to adapt and adjust their strategies to ensure the smooth operation of their supply chains.
The Role of AI and Robotics in Supply Chains
As the global trade landscape continues to shift, supply chain leaders are focusing on how artificial intelligence (AI) and robotics can improve operational efficiency and reduce physical workloads. With the potential of 100% digital supply chains, businesses could become dramatically more responsive and agile, dealing with tariffs and trade restrictions more effectively. AI and robotics are poised to play a significant role in reshaping Europe’s supply chains, helping to improve productivity and cope with the challenges of labour shortages and rising costs.
SOURCE: Ref Image from The Economic Times
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