Sweeping new U.S. tariffs on Chinese clean-energy products are inflaming tensions between the world’s two dominant economies, raising the stakes for risk leaders already navigating concurrent crises in the Middle East and Europe.
The sanctions announced today by the Biden administration target $18 billion in Chinese imports, quadrupling existing levies on Chinese-made EVs, while imposing new tariffs ranging from 50% on solar panels to 25% on other essential sectors including semiconductors, aluminum, critical minerals, batteries and more.
The White House statement repeatedly references shoring up U.S. supply chains amid anti-competitive practices from China, noting “China’s forced technology transfers and intellectual property theft have contributed to its control of 70, 80, and even 90 percent of global production for the critical inputs necessary for our technologies, infrastructure, energy, and health care—creating unacceptable risks to America’s supply chains and economic security.”
The new tariffs build on existing Trump-Biden Chinese sanctions, which the global think tank Tax Foundation estimates will cut long-run GDP by 0.21%, wages by 0.14% and employment by 166,000 full-time equivalent jobs.
The Ripple Effect: How Geopolitical Events Impact Your Supply Chain
Whether fueled by trade disputes, military conflicts, or regulatory changes, political shocks can reverberate throughout global supply chains, disrupting procurement, production, and distribution.
This dynamic is exacerbated by complex and interconnected supply chains that hide multiple potential sub-tier failure points.
A U.S. Federal Reserve report reveals a heavy dependence on foreign suppliers across various industries, citing the automotive (23.7%), machinery and equipment (18.4%), basic metals (16.8%) and electrical equipment (16.5%) sectors among the top sectors relying on foreign value for exports. This globalized reality necessitates a proactive approach to supply chain risk management.
Beyond Borders: The Globalized Reality of Modern Procurement
The key to strong collaboration with supply partners includes a heavy emphasis on real-time analysis of the extended supplier base – ensuring all stakeholders are positioned for economic success amid volatility.
Here are five strategies for securing supply chain lifecycle risk for maximum adaptability:
1. Implement Real-Time Monitoring and Intelligence
Real-time extended supply chain monitoring enables organizations to detect and gain intelligence for proactive actions from fluid risk events quickly. One leading global defense contractor used supply chain life cycle risk intelligence from Interos to identify concentration risk in a vital $5 billion weapons program, isolating and mitigating the threat in days, rather than weeks, before there was a ripple effect across the enterprise.
2. Transition to Leading Indicators
Moving from lagging to leading risk indicators ensures organizations keep pace with click-speed disruptions. Interos intelligence on another simmering political issue – China’s potential annexation of Taiwan – reveals U.S. companies have almost 70,000 direct (tier-1) relationships with Taiwanese suppliers. In the event of a Chinese attack, Bloomberg Economics estimates up to $10 trillion in potential losses, or about 10% of global GDP. Interos is the only solution to quantify and score enterprise risk to plan for a crisis at this level, enabling enterprises to tailor their risk register for threat management by exception, at scale.
3. Utilize Predictive and Prescriptive Insights
Supply chains are a big data problem built on massive data sets. By leveraging AI to consolidate and analyze trends, companies can proactively identify vulnerabilities and implement preemptive measures. For instance, a global energy company facing rising levels of ESG risk leveraged Interos’ platform to triple its supplier due diligence capacity in one year, without expanding headcount.
4. Invest in Advanced Supply Chain Mapping
AI-powered continuous supply chain mapping enables companies to proactively identity suppliers facing urgent geopolitical and other risks, at speed and scale. In the case of the Russia-Ukraine conflict, Interos’ platform enabled customers to instantly identify key sub-tier suppliers located in harm’s way for alternate sourcing.
5. Foster Collaboration and Information Sharing
Cross-enterprise teams including finance, operations, risk, procurement and sourcing play critical roles in next generation supply chain risk management. Establishing comprehensive and consistent communication channels for trusted risk intelligence is the foundation for speed and clarity in response. Interos ensures companies better understand and align against systemic threats within a single, intuitive platform.
These strategies are essential starting points in meeting the scale and scope of today’s global disruptions. By navigating multi-factor risk with foresight and innovation, organizations can secure their brand, reputation, and profitability – a win for stakeholder at every supply tier of the supply chain.
Read more about global supply chain threats and opportunities in Invisible Threats: Interos’ Annual Supply Chain Industry Risk survey.
