We’ve heard the news for months: new tariffs will disrupt the global supply chain.
Now we don’t know exactly how these new tariffs are going to work, because the situation seems to be changing every day.. Canada and Mexico have gotten tariffs because of fentanyl, then they didn’t, and Colombia just dodged a bullet on tariffs, and so on.
What will this do to the supply chain? Well, it has the potential to wreak havoc, for sure. But let’s see what we can do to turn this 19th-century idea into something we can work around.
Building Walls
Tariffs are a tax on goods imported to a country. In the U.S., when a purchaser gets these goods, they have to pay the tariff right there on the spot. Those funds go to U.S. Customs, putting the money into the U.S. Treasury. Foreign companies don’t actually pay for the tariff—importers in the U.S. do. Any cost incurred by an importer typically beefs up the price of the good they’re selling, whether a car or a sack of bananas.
This has the effect of building a wall around the country. We will only let in what we want in, and if you need it that bad, you’ll pay for it. Since most importers don’t want that extra payment, they’ll look for alternate sources, particularly ones in tariff-free countries, which can lead to inefficiencies in the supply chain.
Anticipating and Acting
This concept is nothing new. Tariffs have been around for a long time, but more importantly, so have disruptions to the supply chain. Whether it’s because of a freak storm that causes a delay or new government regulations, something is always going to screw things up, so we anticipate and act when necessary. We’re proactive, not reactive.
A really good way to do this is through networked solutions. Right now, those of us in the supply chain have disconnected conversations. Nobody talks directly to anybody else; we all hoard data, like the dragon Smaug and his treasure from The Hobbit. If we pooled our information, we could work together to solve these problems and develop solutions that work for all of us.
Today, we can do that with AI. By anonymizing our data, we hedge our bets against disruptions and still keep all of that precious gold—I mean, information. That allows all of us to move faster and become more resistant to rapid shifts in our supply chain.
Let’s Cut Out the Pain Points
Ultimately, disconnected conversations are a big part of the supply chain problem. The president sets up a tariff, and we react. Then he pulls the tariff, and we have to swing right back. Or he could change the amount of the tariff, and we would have to change our calculations on whether or not we move or stay. There are a whole lot of chess moves involved here, and the simple act of talking to each other would help all of us move more quickly.
It’s like all of our information is a stream. In that stream, a bunch of rocks get in the way. Things like ERPs, CRMs, TMS systems, and tariffs all make the water flow like rapids or a soft trickle downwards.
Do those rocks contribute to the process? No. In fact, more often than not, they hinder it, making the flow of information that much more perilous. Why do we keep doing this to ourselves?
Well, we do it because we think it will make our lives easier, but more often than not, it doesn’t. Usually, it just mucks up that water even further until what we get at the end is something that looks like it spent most of its life in the Hudson River.
Let’s Solve It
We’ve got to stop throwing rocks in our way. These tariffs are clearly part of the political mix. They can be used as a threat, enacted upon, and then quickly pulled, as we saw with Colombia. We can’t let those extra rocks get in our way.
Instead, let’s keep that stream flowing by talking to each other. Ditch the disconnected conversations and throw those boulders to the side. Working together makes things a lot easier for everyone. Let’s do that.
Do you know where I talk about all this in detail? My new book, The AI Ecosystems Revolution. It’s available for preorder on Amazon and will be released on April 29, 2025. Preorder your copy today.
