Ongoing trade disputes increasing risk and opportunity for supply chain

Ongoing trade disputes increasing risk and opportunity for supply chain

Continuing trade disputes between the US and China have grabbed many world headlines already this year thanks to a back-and-forth set of retaliatory measures to introduce tariffs on many goods.

This has had a huge knock-on effect on many worldwide supply chains already, and with the fallout still not sorted by any means, there is still a huge amount of pressure on suppliers to maintain effective connections.

Some experts have warned that a cause of the determination to maintain and fulfil current contracts has led to a series of behaviours that could be considered unethical, and even illegal in some cases.

A report released by Bain and Company last week indicated concern over some Chinese companies looking to bypass some of the export tariffs imposed by the US by undertaking a series of mergers and acquisitions (M&As) that allow them to grow stronger trade routes and reduce reliance on keeping open trade with the US.

It seems that although the level of foreign M&As by Chinese companies has slowed, they are seeking ways to be more strategic in their output. From there, Bain and Company suggest that the trend is to create a series of partnerships that allow for better connections with other trade mechanisms and also worry less about the currently weakening yuan.

The report noted that “China’s outbound boom will only continue as companies look to capture new capabilities that strengthen their domestic position, while also growing overseas for a leadership position in which they can take a competitive edge”.

There is, however, some concern that countries such as China are bypassing tariffs by rerouting their trade through other countries, including Vietnam and China, which is considered illegal. This is because of US laws that require a true declaration of how the imported product has travelled.