Several industries (medical and manufacturing, for example) are being impacted by the newly implemented tariffs, and many companies across the country are fearful of the potential impact. Those industries who have not been impacted yet, will be affected with time. To begin the trade war earlier in March of this year, the US announced tariffs of 25% on steel and 10% on aluminum imports, drastically hindering the manufacturing industry as material costs have concurrently been on the rise for the better half of 2018. Not only have these particular tariffs impacted the manufacturing sector, they impact a significant amount of companies who rely on manufacturers for products and services for their own business, such as automotive or medical device companies.

There are many types of companies that are being influenced by the trade war, and the tariffs appear to be implemented in waves. Tariffs on metals appeared first at approximately 25% on imports, and continue to be placed on thousands of other core commodity groups. It is difficult to say what commodities will be impacted as the coming waves of tariffs that are put into effect, however it is possible to develop strategies in an effort to be proactive as the trade war progresses.

The trade war can present several challenges when it comes to developing strategies to mitigate risk and save business operations. Being proactive and thinking ahead is going to be a large component in identifying a feasible strategy to manage the impact of the tariffs. Performing quick, yet comprehensive research on areas such as if and how the business is potentially going to be impacted by the tariffs and identifying and qualifying alternate suppliers in other countries is going to be a crucial starting point for American companies. This will allow the company to gain a strong basic understanding of how the tariffs impact them and be able to piece together components for a suitable go-forward strategy.

Identifying alternate suppliers in other lower-cost countries and transitioning manufacturing operations away from China is a viable strategy that many companies are exploring as a result of the trade war. In order to maintain current costs and product quality, extensive supplier identification and qualification is going to be required as part of this strategy. Determining suitable countries that can businesses can migrate operations to, comprehending supplier capabilities in relation to the business needs, and analyzing costs associated with transitioning the business are going to play an important role in this primary strategy to operate around the tariffs. Additionally, it is important to maintain a level of diversity and refrain from putting all operations in one country, as it allows for more risk associated with having all Procurement's eggs in one basket.

Though there has not been one strategy that fits all scenarios regarding the tariffs, there are common elements to keep in mind as companies develop the strategy that best suits their company’s changing needs. The trade war has certainly become a challenge to work around, however it is important to identify the challenge it may pose on your company, and take action to develop a strategic plan to implement in order to limit the excess costs during this time.
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Samantha Hoy

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