From Sunday night to Monday noon (US Eastern Time) my inbox overflowed with questions and venting — probably more venting than questions. By Monday dinner-time the drama had significantly abated (here and here and here).
Back on December 2, I wrote in regard to Mr. Trump’s tariff strategies, “What is promised — threatened — often morphs to close a deal. So, any speculation by me regarding future tariff impacts on Supply Chain Resilience would be mostly noise. Anticipating the strategic threat certainly reinforces principles of capacity diversification and avoiding excess capacity concentration. This is true whether the threat is tariffs, typhoons, or terrorism…” That’s still my story and I’m sticking to it.
But to hold myself accountable for what is certainly further drama ahead. Here are excerpts from a Monday exchange with a financial journalist. I responded to his request for comments and connections just before 10AM Eastern Time.
The supply chain is also all-hands-on-deck. Everyone is trying to figure it out. Right now I perceive that most of my contacts are moving into the five stages of grief: denial, anger, bargaining, depression, and acceptance. Some continue to deny (“just a bargaining chip…”). I am hearing lots of anger (“dumb, absurd, counter-productive, self-destructive…”). Lots of emails and phone calls starting to try to probe, clarify, and bargain. Sometimes depression and anger are tough for me to distinguish. No one I know has reached acceptance yet. Just starting a meeting that will take much of this morning. Back at you later. Happy to respond to specific questions.
I then disappeared into a two hour-plus session with principals and lawyers involved in spinning-off a small, new company from a long-time player. Tariffs were not mentioned at all during this process.
Emerging from the successful spin-off, I reviewed emails received over that time, returned a couple of phone calls, then sent this follow-up to the same financial journalist:
None of my clients or contacts are ready to talk to you — yet. I’ll keep checking as they make progress on concrete actions. Most of my folks have not found sufficient volumes of non-tariffed substitution goods. So, passing along additional costs is their current “contingency plan”. Many still hope that there will be a quick return to status quo ante (ala Columbia — the potential Mexico delay has been received like a jolt of caffeine). There is, of course, no direct impact on physical flows. So, the consequences depend on how long some significant proportion of consumers are willing to pay higher tariff-related costs… and if these higher value pull signals attract/motivate currently unrecognized sources of push to compete at these higher price-points. For many products it will probably be a few weeks before we have much confidence in how demand will respond and supply will adapt. Sorry I don’t have any talkative friends.
A few hours later the “Mexico delay” was confirmed and the hit on Canada was also postponed for thirty days. China has now retaliated in a very restrained way. President Trump expects to talk with President Xi later today.
A personal challenge in all this drama and delay and (can we call it) diplomacy: On March 4 I am scheduled to give rare public remarks on Supply Chain Resilience. That audience will want much more than I could give them today.