In prior Supply Chain Matters blogs, we have highlighted for our community the realities that the increased escalation of trade tensions and imposed tariffs provide unprecedented levels of challenges for global-wide supply chain management teams.
In the case of the escalating trade war involving the United States and China, it not only includes increased tariffs but the weaponization or protection of strategic supply and customer demand networks.
Our latest update in this area, included highlighting a report indicating that small and medium sized businesses are especially impacted for a variety of reasons.
One continual and persistent theme we have provided for readers is that because these conflicts are so charged with global and domestic political agenda and consequent perceptions, that notions of quick resolution and return to prior normalcy are not likely. This especially applies to both the U.S. and China trade war and an inevitable hard and disruptive Brexit involving the United Kingdom and the European Union. The ongoing trade conflict among Japan and South Korea is a further concern for high tech and consumer electronics industry networks as-well.
Each of these escalating conflicts are fueled by political events and milestones, including upcoming elections, which are seen as voter referendums toward prevailing international trade policies or domestic economic protection.
Yesterday, Jamie Dimon, the Chairman and CEO of J.P. Morgan Chase, a persona that most likely most would agree is quite attuned to Wall Street and global big business power and interests, made a direct and succinct prediction.
Speaking yesterday at the Bloomberg Global Business Forum in New York, he told his audience that he did not anticipate a U.S. and China deal resolution to happen before the U.S. Presidential election. According to reports, while not elaborating why, Mr. Dimon thought an agreement was unlikely to happen sooner.
Such a perspective have been shared by some pundits, business and industry voices, including this blog, each weighting political agenda and saving-face factors over likely pragmatic economic or business impacts.
Thus, the scenario that China’s government officials will likely wait out election outcomes, betting that a new administration will provide different perspectives or bargaining positioning relative to a successful trade agreement outcome, has particular weighting.
For some businesses and their global supply chain management teams, such a scenario may not be anticipated nor ideal. However, despite such views, there needs to be a realization that the forces of component and end-item structural sourcing changes are already occurring in some industry sectors. With each passing month, continued structural change and cost impacts will likely override political rhetoric and posturing.
The reader takeaway is that with businesses and supply chain management teams now approaching 2020 budgeting preparation and development cycles, it might be better to home in on the intuition and gut perspectives of seasoned key insiders, as opposed to politicians.
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