We trust that our Supply Chain Matters readers are garnering insights from our ongoing 2017 Predictions series. We have one prediction remaining which will be our industry-specific supply chain predictions which will publish later this week.

While we are working on the final touches, we did want to share an important development, one that is the common theme that threads many of this year’s predictions for industry and global supply chains.

Some of our readers may well be of the belief that all of the news surrounding the actions or potential actions of the new U.S. Administration are speculation, with more moderate voices to prevail. Our response is perhaps, but then again, who knows what may develop in this current highly charged geopolitical environment.

Industry and global supply chains need to be prepared, at-least in the ability to educate senior management of the implications of such initiatives or changed policies. Thus we will continue to provide added evidence and insights as they become available.

This week, Peter Navarro, the newly appointed head for the U.S. National Trade Council, conducted an interview with the London based Financial Times. In the interview, Trump’s top trade advisor accuses Germany of currency exploitation (Paid subscription or complimentary metered view upon registration), Mr. Navarro commented on a number of European topics, including accusing Germany of currency exploitation, and unlike his predecessor, the new U.S. President prefers bilateral vs. multilateral trade accords. He further declared the death of the European sponsored Transatlantic Trade and Investment Partnership (TTIP) involving Europe and the United States.

Such statements alone are garnering global headlines but we wanted to hone in on some further specific statements directly related to global supply chains.

Specifically, this is what caught our eye:

Mr. Navarro said one of the administration’s trade priorities was unwinding and repatriating the international supply chains on which many US multinational companies rely, taking aim at one of the pillars of the modern global economy.”

“”It does the American economy no long-term good to only keep big box factories where we are now assembling “American’ products that are composed primarily of foreign components,” he said. “we need to manufacture those components in a robust domestic supply chain that will spur job and wage growth.”

Further noted is that Mr. Navarro all but endorsed the import tax plan now being advocated by Republican leaders in the U.S. House of Representatives.

Readers can certainly have their individual impressions of the above statements.

From our lens, they represent the clearest indication yet of a U.S. policy targeted at building multi-tiered product value chain and supply chain capabilities across industry settings. That is a far different model than exists today. Think for a moment of the current supply chain network models of Apple, HP, Nike, Fiat-Chrysler and others to cite but a few.

Such tenets of bi-lateral and domestic goods movement imply far different supply chain profiles than exist today, and our collective community is going to be very busy dealing with any of the consequences.

Just as the nineteen nineties began the movement toward globally linked corporations and associated supply chain profiles and capabilities, what is on the table in 2017 can represent a far different dimension with a number of consequences.

Supply Chain Matters has in prior years advocated for re-building certain U.S. based industry supply chain multi-tiered capabilities, specifically that of high tech and consumer electronics. This proposed new direction is far more inclusive and broad based.

Our shared takeaway is to not dismiss the current geopolitical environment as a tempest in a teapot. There is significant change being pitched and industry supply chain leaders need to be aware and need to be ready to educate on the consequence and action plans as well as forming potential scenario plans.

Bob Ferrari

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