CSIS Expert's Guide to 'Surviving Tariffs' Highlights Importance of Supply Chain Managers
After the economic impact of tariffs takes hold in the U.S. economy, companies will have to employ a mix of "adroit supply chain management" and "begging" for tariff exemptions from the Trump administration, said William Reinsch, a senior adviser at the Center for Strategic and International Studies.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
In his weekly column published March 24, Reinsch laid out the potential strategies for governments, companies and people to survive in the brave new world of high tariffs. Companies "should not believe" Trump when he says there will be no exemptions to his tariffs; instead, they "should marshal their arguments, mobilize their elected officials, and hope they hit the jackpot," he said. They will be aided by the negative reaction to small businesses forced into insolvency by high tariff rates, which he said will force the administration to "return to the exemption process as a political safety valve."
At the same time, he said, companies must be "frantically identifying inputs from high-tariff countries in their supply chains and searching for low-tariff alternatives," a strategy unavailable for smaller entities. This will mitigate some cost increases, but not all: "Supply chain managers may be able to find lower tariff options, but they are unlikely to find many viable zero tariff options, so their costs will inevitably go up, as will their prices," Reinsch said.
The inevitable price increases will tempt some businesses into circumvention and customs fraud, he warned. While careful to disavow the practice, "if imports from Central America, Oman, or Bahrain suddenly boom," he said, "you will know the reason why."
For governments, Reinsch expects them to employ either the "Sheinbaum Strategy" of making modest concessions to let Trump claim a victory, or, if their economies are large enough, to retaliate. For countries employing the former, he said that "the appearance of winning is more important than what he [Donald Trump] actually wins." What Trump really cares about is "the opportunity to say, 'I won; they folded,'" according to Reinsch.
Consumers, he said, are "at the bottom of the economic food chain," and can do little to change their lot. Reinsch said that what they can do is protest to their representatives in the hopes that this will "help some members of Congress find their spines and take steps to restore Congress’ constitutional role in setting trade policy."