April 2022

The domino-like effect inflation has exacted on supply chains, the economy and its participants is forcing the vast majority of small-business owners around the country to do what their buyers detest: raise prices. And it may be a while before said companies can return those prices to where they were. 

Over the past year, more than two-thirds of small-business owners say they've increased what they charge customers for their traditional products and services, according to the results of a quarterly survey conducted by the U.S. Chamber of Commerce. But they've done so reluctantly, with approximately 8 in 10 citing inflation as their primary business concern, which has overtaken the supply chain as their biggest ongoing worry.

Tom Sullivan, vice president for the Chamber's small business policy division, noted that there are no winners in a hyperinflation environment; everybody's dollar buys less.

"Inflation is top of mind for small businesses as it continues to limit their purchasing power, forcing small businesses to raise their prices and absorb higher costs within already thin margins," Sullivan said, as reported by Supply Chain Dive.

6 in 10 Americans are very concerned about inflation
Unsurprisingly, small-business owners aren't the only ones preoccupied by sky-high costs. Roughly 60% of Americans in a recent Gallup poll said inflation worries them "a great deal" and nearly 1 in 5 cite it as the U.S.' single biggest problem — tied with the overall economy, the cost of fuel, and income inequality when combined. 

Inflation is a byproduct of too much money chasing too few goods.Inflation is a product of too much money chasing too few goods.

Aside from the budgetary challenges inflation causes for business owners as well as everyday consumers, another consequence is the impact of efforts to fix it. From the Federal Reserve increasing key interest rates to families opting to not buy as much — which reduces the demand — the solutions frequently involve some level of hardship. In the 1970s, for example, when inflation was severe, it triggered a recession in the early 1980s. At the time, interest rates were at record highs.

A perfect storm
Economists are at odds over how entrenched inflation is this time around, but as with the previous era of elevated inflation, the Fed has begun to increase interest rates, doing so in March for the first time in almost four years.

Neil Bradley, chief policy officer and head of strategic advocacy at the Chamber of Commerce, told Supply Chain Dive that a perfect storm of conditions has led to the current economic environment, much of it brought on by the pandemic.

"Supply chain disruptions, energy prices and a persistent shortage of labor are all coming together at a time of sustained demand to force prices up," Bradley said in email to the news source. He further noted that small-business owners frequently bear the brunt of inflationary pressures. Not only are their margins leaner, but they also have to increase their prices more quickly, something that larger organizations can put off, given they have more sources of income to maintain adequate cash flow.

In the meantime, organizations of all sizes will continue to strategize and coordinate to rein in their expenses wherever possible without compromising quality.

Used as a glue alternative and in the manufacturing process of vaccines, eggs are an invaluable component of the supply chain, with applications that go far beyond the kitchen and what's for breakfast. But the national availability of them may be compromised in the days ahead due to a bird flu strain that appears to have impacted tens of million of hens.

According to multiple sources, million of chickens from roughly half of the U.S. have died as a result of avian flu. The highly transmissible virus is believed to have impacted egg-laying flocks in at least 24 states, according to National Public Radio, killing up to as many as 22 million birds. Some of the birds died from the virus itself, but most were culled by poultry farmers as a precautionary measure.

That's a tremendous amount of eggs that will be taken out of the supply chain pipeline, especially for a country that is among the world leaders in egg consumption, albeit in lower per-capita volumes than in previous years.

Iowa taken largest losses
Some states have been hit harder by the outbreak than others. Chicken farmers in Iowa, for example, have killed off at least 13 million birds, with nearly half of those cullings occurring at a facility in Osceola, according to the Department of Agriculture. The Hawkeye State leads the nation in overall egg production, according to the United Egg Producers. Indiana and Ohio, which round out the top three, are some of the other states the avian flu has reached.

Farmers have culled hens by the millions due the Avian flu.Farmers have culled hens by the millions due the avian flu.

Iowa-based poultry farmer Ben Slinger has emerged unscathed from the flu strain thus far, but he knows what it's like to be impacted. Slinger told NPR he lost tens of thousands of turkeys in 2015 when some of them became infected with a strain at the time. He's since learned from that experience and is taking precautions with this flock to stymie transmission.

"We know what the aftermath of that is like, and it is pretty disheartening," Slinger said.

5-day supply of eggs nationally
Even without a deadly pathogen decimating flocks, the poultry industry is a shell of its former self. In 2019, for example, there were 340 million egg-laying hens nationwide, CoBank reported from government data. That number has since fallen to roughly 322 million. Some of these losses derive from there simply not being as many poultry farmers as there used to be, while others stem from compliance and regulatory scrutiny that has made remaining in business unsustainable. Combined with the overall supply chain complications, egg inventories are down from their former perch. Indeed, there are approximately 1.6 million 30-dozen egg cases on hand at a national level, based on the most recent weekly figures available from the U.S. Department of Agriculture. Based on the rate of consumption, this translates to around five days' worth. 

These inventory pressures combined with inflation have pushed egg prices increasingly higher, both for wholesale and retail. For the week of April 4, a dozen large eggs were selling for an average of approximately $2.60, up from $1.60 in January, the USDA said.

Prices for consumers haven't climbed quite like this since the early 1980s. But it turns out business owners are feeling costs pressures like never before, providing added context for why everything is coming at an ever higher expense.

The Producer Price Index, which tracks what business owners pay for the materials involved in their goods and services, rose more than 11% (unadjusted) in March compared to a year ago, according to the Department of Labor. Not only was the increase more substantial than what consumers felt — 8.5%, according to the Labor Department's Consumer Price Index report — it's the most substantial year-over-year growth on record.

Energy prices, which are a major contributor to inflation, also rose from March 2021 and were responsible for more than half of the upward movement to the PPI, the Labor Department revealed.

As with previous economic challenges, the problems plaguing the supply chain and runaway inflation are feeding upon one another, although it's unclear which issue triggered the other. But everyone — business owners as well as customers — is being impacted. These same people largely expect the price hikes to continue. Indeed, nearly 80% of Americans said they anticipate inflation to be a major problem even six months from now, according to a Gallup survey. Just 9% think prices will be lower than they are today. Economists believe the rising price trend could last well into 2020.

While economists did forecast the PPI to rise, the degree to which it did came as a surprise. Economists polled by Reuters forecast a hike of 10.6% on a year-over-year basis. The PPI for final demand measure also came in higher than anticipated, increasing 1.4% versus the 1.1% advanced that economists hypothesized.

Rising foods costs contributed to the record growth in the Producer Price Index.Rising food costs contributed to the record growth in the Producer Price Index.

Proposed solutions to high energy prices may not be fruitful
Meanwhile lawmakers are taking steps to help Americans lower their expenses. In addition to tapping into the Strategic Oil Reserve, President Joe Biden announced that oil producers could start using more corn-based ethanol in their gas production. Currently, environmental strictures are in place that limit the sale and development of E15. But starting in June, some of those restrictions will be lifted.

However, critics don't believe this move will make much of a difference in the price of gas. As Reuters points out, E15 doesn't have the same kind of energy density compared to traditional unleaded fuel. This means on a gallon-per-gallon basis, consumers will have to buy more than they would with regular gas.

Furthermore, similar to electric charging stations, there aren't many gas stations that offer E15 as an alternative. Of the country's 150,000 gas stations, only 2,300 sell E15, according to The Wall Street Journal.

With the war still raging in the Ukraine, COVID infections beginning to rise again and a sweeping lockdown being imposed in Shanghai by China, economists believe the worst may be yet to come, both for the supply chain and for Americans' bottom line.

Perhaps the only thing more difficult than fixing the supply chain is settling on the main source of its breakdown. From the effects of the pandemic to environmental catastrophes affecting infrastructure to the Great Resignation, there are no shortage of contributors. A top contender, however, is high turnover. During the height of the COVID-19 crisis, when employers and government officials initiated lockdowns as a safety precaution, the experience led millions of people to reevaluate their careers, with some opting to leave their industry entirely. As a 2021 survey from Gallup found, half of Americans are actively on the hunt for a different job opportunity. Many of these employees are in industries where a well-oiled supply chain is pivotal to success, including manufacturing, logistics and trucking.

Employers are implementing various strategies to blunt the employee exodus, one of which is stay interviews. Leveraging this strategy may prove effective in improving retention and — as a result — supporting your supply chain.

What is a stay interview?
As its title implies, a stay interview is a retention technique designed to persuade current employees to remain at their present jobs. Whereas an exit interview is more about the why  — namely, why a worker is quitting — a stay interview is focused on the how. In other words, it's a determination of how the worker's employer can make the job better.

How does a stay interview positively affect the supply chain?
Of course, there are many aspects to the supply chain. But a supply chain doesn't exist without workers there to support it and churn out product. If an extraordinarily talented individual in warehousing leaves their job, the supply chain winds up suffering, evidenced by increased downtime, diminished productivity, accounting errors and process redundancies.  

Stay interviews should ideally be more conversational in tone.Stay interviews should ideally be more conversational in tone.

Here are a few example questions for stay interviews:

What do you like best about your job?
Here, the goal is to identify what aspects of a job your star employees like so they can do more of it. The more specifics they can identify as to what makes it great, the better.

What do you like the least?
Every occupation has its downsides, some of which may be unavoidable. But feedback in this regard can help you determine what tweaks can be made to make the task less onerous or unpleasant. In warehousing-related positions, where manual labor is often involved, leveraging automation may be a potential solution.

What would lead you to quit?
The salary of a position is and always will be a contributor to turnover, but it's not the leading reason for why individuals opt to seek out a different job opportunity. According to a survey conducted by MIT Sloan Management Review, the biggest motivator is a toxic workplace culture. Indeed, the poll revealed that an employee is 10 times more likely to quit in a toxic work environment than if another job is offering more money.

By getting out ahead of turnover and replicating the aspects of the job your workers enjoy — while eliminating those they don't — you can maintain or improve the performance of your supply chain by keeping your workers engaged.

Just as the ongoing supply chain problems have many causes, they also have many aftereffects, one of which is rising inflation. And in March, the continuation of too many dollars chasing after too few goods pushed the Consumer Price Index to fresh heights, dealing a blow to business owners' and consumers' already stretched budgets.  

The Consumer Price Index in March rose 8.5% on a year-over-year basis, according to newly released data from the Department of Labor. Additionally, the CPI grew a seasonally adjusted 1.2% from the previous month, a notable uptick from the 0.8% gain seen in the February report.

With the 8.5% gain, this latest CPI report is the sixth consecutive month in which inflation has been at or above 6%, The Wall Street Journal pointed out.

The biggest contributor to the latest surge in prices is the cost of fuel, the report said. Indeed, the gasoline index jumped more than 18% in March from 12 months earlier. The food index, meanwhile, elevated approximately 1% over the same period.

Increasing what they charge is often the last resort for businesses that are spending more to stay afloat, as they prefer to opt instead for alternative cost-cutting strategies wherever possible, such as staffing cuts or applying for a loan. But it's been unavoidable for the vast majority of both small and large organizations over the past year. In the past 12 months, fully 66% of small businesses have been forced to increase prices on the services and goods they sell, according to a quarterly report from the U.S. Chamber of Commerce.

Added supply helped dealers rein in new and used car prices.Added supply helped dealers rein in new and used car prices in March. 

Slight dip in month-over-month inflation
But the latest CPI report wasn't all bad news. When excluding the cost of food and energy — meaning core inflation — prices climbed 0.3% in March, the Labor Department reported. In February, the same measure was 0.5%.

As for why core inflation slowed down, falling car prices likely represent the main reason, according to Fitch Chief Economist Brian Coulton in an email to CNN. Blerina Uruci, an economist at T. Rowe Price, told The Wall Street Journal that with automobiles being the exception, prices are higher for just about everything else.

"To me, this is a red flag," Uruci explained. "The other red flag is Russia's invasion of Ukraine and the rise of COVID in China. "Those pose risks that the so-called normalization of supply chains takes longer to materialize."

While economists are at odds as to how to resolve inflation and when prices will finally start to pull back, many agree that supply chain disruptions were the tipping point. From how the COVID-19 lockdown diminished production to the dramatic surge in demand fueled by government stimulus spending, a severe shortage of products forced businesses to raise their prices.

So long as the supply chain interruptions remain problematic, inflation will likely remain a theme for the economy for the foreseeable future. Indeed, economists suspect it will be "uncomfortably high" for the rest of the year, according to a WSJ poll.

AI artificial intelligence mapping brain as digital circuit network
If you search on the internet, it is no surprise that Artificial Intelligence (AI) and its potential to significantly change the workplace is a consistent trend with companies that want to grow. While it is not a new concept, the opportunity for application and saturation in financial services is accelerating.

AI is no longer reserved for big tech and entertainment-focused companies. Albeit these organizations tend to lead the way with integrating AI in their most recent product launches.

The relatively inexpensive cost to create and implement AI into software applications has broadened the scope of use, specifically when it comes to everyday business processes. The first question to ask when considering the adoption of AI, or any technology for your company, is how will it help grow the business, reduce costs, and improve cashflow?

One use case explored involves AI Automation within a finance organization. The solution was deployed to automate invoice processing, a monotonous task that was time-consuming for employees who manually entered large amounts of data and reconciled against multiple records. The use of AI invoice automation software has significantly reduced processing inefficiency, data entry errors and processing time.

In another use scenario, a company was able to reduce their data extraction manual efforts by two full days. On average, reading and keying data from an invoice takes an employee approximately three (3) minutes per invoice. Automating that process for close to 500 invoices monthly, results in 25+ hours of time savings. This reduction is attributed to the ability of AI to read, extract, and transpose:

  • Supplier Names
  • Payment Terms
  • Bill Dates
  • Invoice Numbers
  • Line-Item SKUs and Descriptions
  • Quantities
  • Prices and Taxes
As a bonus, the AI results in fewer keying errors than the customer’s existing manual processes.

AI invoice automation “learns” and evolves on an ongoing basis. While processing big data, it contextualizes information and understands different languages. Most importantly, employees previously responsible for related tasks are free to focus on more strategic contributions to the organization.

It is difficult to envision any market that would not benefit from AI invoice automation technology. If your organization procures products or services, paying invoices quickly should be a top priority. As a finance team, using AI invoice AP (Accounts Payable) processing software should be simple and easy.

Are you a CFO or business leader interested in reducing expenses and improving your procurement process? Learn more about AI-driven invoice automation in the AI, Automation and Invoicing Revolution webinar with Julien Nadaud, Senior Vice President of Innovation at Corcentric.

Amid growing calls from the American public and fossil fuel industry stakeholders to increase domestic drilling, the Biden administration is taking a different approach to the country's energy crunch by increasing the supply of raw materials needed for electric vehicles. But critics suspect the move may have unintended consequences.

The White House recently authorized the Defense Production Act, an executive action that is available to the sitting president. In this instance, invoking the Defense Production Act will provide miners with the resources needed to acquire more minerals — such as manganese, graphite, cobalt and lithium — that can be leveraged for electric vehicle production and to manufacture the batteries that electric vehicles run on.

To ensure that the drilling for these minerals don't compromise the strides the United States has made in carbon emission reduction, the White House noted it will work in tandem with the Department of Defense to maintain "strong environmental, labor, community and tribal consultation standards."

This latest action by the Biden administration is part of a multi-pronged effort to bring some semblance of balance and normalcy to the energy supply chain. With a war being waged in Ukraine, hyperinflation pushing prices increasingly higher and more individuals returning to the workplace after COVID-19 protocols had many people telecommuting — thus increasing the demand for gas — the combination of these factors has only further destabilized the economic landscape. With more access to the resources needed for alternative energy, supporters of the administration's actions say the latest move will help to diminish the nation's reliance on fossil fuels.

Nickel is a key ingredient for electric vehicle batteries.Nickel is a key ingredient for electric vehicle batteries.

NMA warns supply chains aren't ready
However, critics of the president's policy don't believe it will be beneficial — in fact, it may even be harmful. Speaking on behalf of the National Mining Association, NMA President and CEO Rich Nolan warned that the directive from the White House could create more demand than the domestic minerals supply chain can reasonably satisfy. That's largely because many of the minerals required to make electric vehicles are primarily imported from overseas.

"[T]he approaching minerals demand wave is set to strain every sector of the economy and requires an urgency in action from government and industry never before seen," Nolan said. "Unless we continue to build on this action, and get serious about reshoring these supply chains and bringing new mines and mineral processing online, we risk feeding the minerals dominance of geopolitical rivals."

According to the Office of Energy Efficiency & Renewable Energy, between 2016 and 2019, more than half of the lithium the United States imported derived from Argentina and approximately 36% came from Chile, which borders Argentina to the west.

The Natural Resources Defense Council, meanwhile, said that while the Biden administration's actions are laudable, the president must urge miners to use all due discretion in terms of how these strategic minerals are obtained. In short, the preservation of the environment must be prioritized. 

"Rather than just digging up or importing more, we should start with improved recovery and waste reduction throughout supply chains," said Bobby McEnaney, senor lands analyst for the NRDC.

He added these materials should be recycled to ensure the U.S. maintains its commitment to environmental sustainability.

Whether served hot or cold, wet or dry, oats are a staple food for millions of people all around the world. Indeed, they're often the first thing families eat when they wake up in the morning for their daily breakfast. Lately, however, oats are being leveraged for more than just the most important meal of the day: They're being used as a substitute for dairy products and as a topical agent to reduce swelling.

It's this growth in oat usage — paired with poor crop yields — that has led to a global oat shortage. And suppliers are beginning to adjust their business processes and policies to mitigate the effects of that shortage.

Oat production in U.S. fell close to 40% in 2021
In 2020, oat farmers in the U.S. produced approximately 657,000 bushels of oats, according to data from the U.S. Department of Agriculture and National Agricultural Statistics Service. That number fell to just 398,000 last year, a drop off of nearly 40% on a year-over-year basis.

Limited rainfall has been a major contributor the dip in oat yields. Much like most other vegetation, oats require plenty of water to grow and thrive. But 2021 was a dry year not just for the states that lead in oat production — like the Dakotas —  the same was true for the nation overall. According to the National Centers for Environmental Information, at least 5% of the U.S. was "very dry" for three-quarters of the year, with more than a third of the country receiving minimal rainfall in November alone.

Oat production has suffered over the past year.Oat production has suffered over the past year.

The U.S. wasn't the only major oat-producing country that experienced severe drought in 2021. Dry weather also plagued Canada, the world's leading oat exporter. According to Bloomberg, 2021 was the worst oat harvest on record for Canada.

In response, major oat producers are starting to raise their prices. This includes Oatly, which specializes in oat milk, a popular dairy alternative. In an earnings call with investors, Oatly Chief Financial Officer Christian Hanke said the company has already begun to raise its prices due to supply chain fluctuations, inflation and diminished product.

"We are seeing higher costs, raw materials, logistics and energy globally as well as labor inflation," Hanke explained, according to a transcript from Seeking Alpha. "We are strategically taking price increases in [Europe the Middle East and Africa] the Americas to help offset a portion of these higher costs. Price increases are already in effect in certain markets in EMEA and we will begin to see the benefit of price increases in the Americas starting in the second half of 2022."

While the market will be the ultimate determinant of how much longer higher prices will last, Oatly is already taking measures to enhance oat output. Late last year, for example, the plant-based milk manufacturer revealed that it was preparing to build three new manufacturing facilities — one in Utah, another in Singapore and a third based in China. If all goes as planned, all the locations should be fully operational in 2023. Once up and running, these locations are expected to increase global capacity by 450 million liters per year.

Do you have any satellite offices that are located in Germany? Is the western European nation a major shipping destination for some of your products? If so, a new law is in the offing that could affect your overseas operations and what you need to do to get your supply chain in compliance. It's called the Supply Chain Due Diligence Act, and while the legislation is several months away from implementation, the bill requires business owners to demonstrate more oversight over their supply chains to ensure employees are kept safe and their basic human rights are upheld.

What is the Supply Chain Due Diligence Act?
Formally known as the Act on Corporate Due Diligence in Supply Chains, the Supply Chain Due Diligence Act is a law that mandates large organizations (specifically those that employ 3,000 or more employees) to deploy more oversight and visibility into their work environments in terms of how they're maintained. More specifically, it requires organizations to take all the "appropriate measures" necessary to ensure workers aren't subjected to conditions that would infringe upon their human rights.

For example, under the law, businesses are prohibited from employing any one who is 15 years of age or younger. The Supply Chain Due Diligence Act also bars wage discrimination.

In addition to these human rights protections, businesses must also provide assurances that they're not adversely harming the environment in their day-to-day business activities and processes. This includes a prohibition on "causing harmful changes to the soil, polluting water, polluting air, causing harmful noise emission or overconsuming water," among other rules.

If you operate a German organization or any of your business activities take place in Germany, you may need to take the appropriate steps to ensure that you're in compliance with this regulation. These steps may include establishing a comprehensive risk management system, setting up a task force to develop procedures related to compliance and adopting a policy statement that outlines your business's human rights strategy.

The Supply Chain Due Diligence Act addresses several aspects of workplace discrimination.The Supply Chain Due Diligence Act addresses several aspects of workplace discrimination.

European Union is following suit
It isn't just Germany that is taking human and environmental rights more seriously as they pertain to supply chain management. The European Union is as well. In February, the European Commission adopted a proposal that aims to strengthen "sustainable and responsible corporate behavior throughout global supply chains." While this due diligence law remains in preliminary stage, it would affect more businesses than Germany's rule. For example, instead of companies with 3,000 employees as the baseline, it would impact businesses that employ at least 500 people on the payroll and have locations in any of the 27 countries that comprise the EU. The proposal may eventually impact small businesses.

Didier Reynders, who serves as the EU's sitting commissioner for justice, said the due diligence law is a long time coming.

"This proposal is a real game-changer in the way companies operate their business activities throughout their global supply chain," Reynders explained in a statement. "With these rules, we want to stand up for human rights and lead the green transition. We can no longer turn a blind eye on what happens down our value chains. We need a shift in our economic model."

While it's unclear how the the EU's due diligence laws will be legislated at this point, you may want to consult with a supply chain management team to strengthen your compliance protocols relating to employee wellness and establish systems that ensure discrimination — in all its forms — is never an issue.

With fuel prices at record highs amid surging inflation and a war raging in Eastern Europe, the United States is tapping into its strategic oil reserves, which the White House says should help take the pressure off the cost of gas.

Effective immediately, the strategic petroleum reserve is set to dispense approximately 1 million barrels of oil per day, President Joe Biden announced from the White House recently. This will be carried out daily for the next six months, which will be an extra 183 million barrels of oil on top of the approximately 20 million barrels Americans consume in the typical day.

In a press release, the White House noted that this move is a first for the country, in terms of the length of time and the amount oil drawn from the reserve since it was created back in 1975.

"The scale of this release is unprecedented: the world has never had a release of oil reserves at this 1 million per day rate for this length of time," the Biden administration said. "This record release will provide a historic amount of supply to serve as bridge until the end of the year when domestic production ramps up."

A barrel of oil contains approximately 42 gallons.A barrel of oil contains approximately 42 gallons.

For the better part of two years, regular unleaded gasoline and diesel prices have steadily climbed. Indeed, for the week of March 28, the average price for a gallon of gas nationwide was approximately $4.23, according to the U.S. Energy Information Administration. That's up by nearly $1.38 from a year ago and by over $2 for diesel, with a gallon of this fuel type averaging $5.18. In several parts of the U.S., prices for both diesel and regular are well above $5.

The supply chain has felt the impact of surging gas prices. Because oil largely fuels the economy — used to make plastics, power vehicles and equipment and heat buildings — business owners have raised their prices to offset the fact that they're spending.  Sticker shock has forced some consumers to then scale back what they buy.

Are gas prices poised to decrease?
Will the additional 1 million barrels of oil will notably reduce the pain at the pump?  Economists are skeptical, including Wells Fargo Securities' Roger Read, a senior analyst for the investment bank.

"I don't want to make it sound like it's nothing, but you just arrive at the issue where we may be off a lot more than just 1 million barrels," Read told CNBC. "So it helps, but it's unlikely to solve the problem," he said. "In the end, it's a little bit of a Band-Aid and I think a little bit of hoping to get later in the year [Organization of the Petroleum Exporting Countries] will catch up."

Although it was initially reluctant to increase output, OPEC says it will produce an additional 432,000 barrels of oil per day starting May 1, CNBC reported. OPEC represents over a dozen countries, most located in the oil-rich Middle East. 

Tariffs are imposed for a variety of reasons, including to encourage business owners to buy domestically for their production needs. But with inflation and elevated demand for key materials adversely affecting the supply chain, tariffs are being lifted on steel and aluminum deriving from other parts of the world.

In a joint statement issued by the governments of the United States as well as the United Kingdom, the nations announced they have worked out an arrangement that will ease tariffs on steel, aluminum and a few other products that are traded between the two countries. As of June 1, the United Kingdom will be permitted to import a predetermined amount of steel and aluminum into the United States without having to pay the costs associated with duties, Supply Chain Dive reported. In response to this  largesse, the U.K. will rein in what tariffs it charges for U.S.-based products by $500 million.

Similar to gasoline, steel prices have been rising for awhile now and are climbing even more exponentially in recent weeks due to the war in Ukraine, which is a major steel producer.

Angelica Donati, who heads business development for the construction firm Donata SpA, told Bloomberg that certain kinds of steel are virtually impossible to obtain, which has exacerbated issues affecting the global supply chain.

"Corten steel, mostly produced in Ukraine, is completely unavailable at the moment," Donati told the media conglomerate. "This means that any site where corten is used — it is a major component for viaducts in Italy, for example — will inevitably have to stop production." Corten steel is also commonly used in street furniture fabrication and for signage.

The ubiquity of steel uses has contributed to supply chain issues.The ubiquity of steel uses has contributed to supply chain issues.

Tariff implementation depends on volume
Officials in the U.S. and U.K. are optimistic that this newly struck agreement will help to increase the global supply of steel by stimulating the free market and encouraging trade activity. However, the tariffs aren't being taken off the table entirely. Whether they go into effect are not depends on volume. As referenced by Supply Chain Dive, the U.K. can send as much as 900,000 metric tons of aluminum and 500,000 metric tons of steel into the U.S. in a given year before triggering tariffs. The E.U., meanwhile, can import 18,366 metric tons of aluminum and 3.3 million metric tons of steel.

Gina Raimondo, the current secretary for the Department of Commerce, said this deal is a win-win scenario for both countries, but especially the U.S.

"Today's historic deal is a testament to that ambitious goal and will benefit America's steel and aluminum industries and workers by protecting manufacturing, as well as consumers by easing inflationary pressures in the U.S.," she stated. "By allowing for a flow of duty-free steel and aluminum from the U.K., we further ease the gap between supply and demand for these products in the United States."

The United Kingdom is a major trading partner of the United States. Based on the most recent government figures available, the U.K. was the U.S.' fifth largest in terms of exports.