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Protectionist Winds Have Business Focusing On ReShoring

Protectionism is in the air. Clinton, Sanders and Trump have all come out against the Trans Pacific Partnership ( TPP ). Regardless of what you feel about it, TPP is going to face tough sailing. There has been additional national political discussion about putting up domestic trade barriers. We already see these being erected overseas. There is also discussion of taxing the profits from off shore production. The new protectionist environment is creating additional risk and uncertainty across the International markets. This is coupled with the existing risks from currency fluctuations and extended supply chains that companies are already dealing with. Companies need to develop strategies to confront the developing negative business environment. They must start asking, or re-asking, questions about where and how to source their products. Local sourcing is again gaining favor, truncating extended supply chains. If new taxes and tariffs are going to reduce margins or profits, perhaps reshoring becomes appropriate, but not just reshoring in the US, but in major markets around the world. Companies must no longer just ask where should we source and manufacture, but how many places should they do it in. Then comes the question of what should the multiple supply chains look like? What will this do to manufacturing costs vs tariffs? While the analysis is not new, the number of points to be considered has geometrically increased. Prioritizing these analyses will be based on market size.
Other than increased prices and costs in the US, the net result of the tariff impact will be an increase in reshoring and near shoring activity, regardless of who is elected this coming November. If your supply chain is spread across the globe, you should probably start to revisit these analyses now