The Pulse: Global Supply Chains in Turmoil

Turbulent economic conditions are reshaping global supply chains as recent U.S. policies deliver a mix of challenges and uncertainties. The episode explores key themes such as trade tariffs, the impacts of deregulation, and their far-reaching effects on supply chains worldwide.

• Analysis of the Bank of England's interest rate changes and economic forecasts 
• Discussion of President Trump's tariff policies and global market implications 
• Consequences of USAID cuts on international relations and humanitarian aid 
• Examination of environmental impacts from U.S. deregulation policies 
• Exploration of the regulation versus deregulation paradox in public policy 
• Impact of geopolitical tensions in resource-rich regions on supply chains 
• Updates on Chinese influence in Central America and implications for trade 
• Focus on trade disruptions and rising costs for American consumers 

Don't forget to subscribe to the podcast. You'll be first to know when new episodes are coming your way and you can always message us through the text message on the episodes on the Chain Reaction website, look forward to hearing from you.

You can follow Chain Reaction on LinkedIn, Twitter and Facebook

Transcript

Tony Hines: 0:01

Hello, tony Hines. Here You're listening to the Chain Reaction podcast, all about supply chain advantage. You're listening to the Pulse, the heartbeat of business, all things impacting global supply chains. This week In the news this week Taxes, tariffs, trade and turbulence. The Bank of England raised interest rates this week by one quarter of a percent. It was widely predicted. I predicted it here in last week's News Roundup. What will it mean? Well, it means lower rates for borrowers and lower rates for savers.

Tony Hines: 0:52

All forecasts coming out in the UK this week point towards stagflation and you will have heard me talk about stagflation on the Chain Reaction podcast in the past couple of weeks. And stagflation is the worst of all worlds no growth, inflation and prices going up, up up. The Bank of England has cut its forecast for growth in the United Kingdom from 1.5% to just 0.75% for this year, and that's after some bad news about job prospects, inflation and, of course, those taxes imposed by the UK government on employment, for national insurance cost and the increase in wages coming down the pipeline all due to happen in April. So April's going to be quite a crunch month and the Office for National Statistics will probably have more bad news in April, at the end of April to report, so not looking good at present, and the bank's forecast reflects that. To add to the woes, of course, we have President Trump's tariffs and the chaos being caused in world markets. It certainly set the cat amongst the pigeons, and the turbulence is all around for everyone to see. It's like a whirlwind's hit.

Tony Hines: 2:15

It's been a busy week in the United States. There was a proposal for the takeover of Gaza by the US. Thousands of USAID staff were put on leave. The US imposed tariffs on China and pulled back on the tariffs proposed for both Mexico and Canada. They pressed ahead with plans to incentivize federal workers to resign. They wanted to buy them out of their jobs. They've sanctioned the International Criminal Court and ordered strikes against the Islamic State in Somalia, and they've withdrawn from the United States institutions UNRWA and the Human Rights Council, the UN Human Rights Council, and they're reviewing UN educational, scientific and cultural organizations, unesco, within the next 90 days. And there have been planes sending people back to Colombia, as well as to India, and also migrants to Guantanamo Bay.

Tony Hines: 3:15

Trump also said he wanted Ukraine to guarantee the supply of more rare earth metals in exchange for $300 billion to support its fight against Russia. Of course, they won't be getting those rare earth metals from China because limitations have been placed on them by the Chinese government. They've banned transgender competitors from women's sports, released water from dams in California. There's been a whole host of things happening all very fast. It's difficult to unravel what the impact on global supply chains will be. Perhaps when the dust sells in a few weeks' time if the dust ever does settle we might be able to make some assessment.

Tony Hines: 3:55

As the markets closed on Friday, the sentiment about the tariffs has tumbled the Dow Jones by 300 points. They're concerned about tariffs and inflation fears. The Nasdaq has also fallen 1%, led by Amazon. The macro environment has certainly turned more hostile in the past couple of weeks. Trump has delayed the cancellation of de minimis trade exemptions targeting China's imports, and the US Postal Service is back open taking packages from China, but for 24 hours. That looked to be in some turbulence too. The Economist this week has said that the tariff uncertainty created in the United States is as ruinous as the tariffs themselves. The US economy has added just 143,000 jobs in January, but unemployment has fallen to 4%.

Tony Hines: 4:52

The closure of US aid has left South Africans living with HIV in some difficulties. Africans living with HIV in some difficulties. You'll recall that the US have stopped the aid program and they've fired thousands of people who are carrying out the aid. South Africa has one of the worst HIV-AIDS epidemics and about 8.5 million people are living with the disease. They relied on USAID to help with the problem and now that particular route is not available to many. Usaid is now in turmoil. So where next? I guess this is going to lose a lot of friends for the United States around the world, and who knows where support might go next from those countries being pushed away? Will they go to China or will they go elsewhere? There have been protests inside the United States against the cuts imposed by Elon Musk on the Environmental Protection Agency, and the staff who are under threat with their jobs have come out to protest, saying Elon Musk has not been elected and should not be making these decisions. Of course, he's appointed by the president and the president is in agreement. So this is going to rumble on. So lots of political unrest, not just around the world, but at home in the United States too.

Tony Hines: 6:14

Clean water, cleaner and clean everything is dependent on the EPA. In the United States. They look after those environmental concerns and of course it puts lots of things at risk. It puts people's health at risk if there isn't an effective environmental protection agency. And it's protected people's lives for many years, and you remember the special edition I did on plastics and all those forever chemicals. Well, the EPA was instrumental in those safeguards. And what appears to be happening in the deregulation going ahead at the moment because that's what it's part of it's part of this deregulation it appears that those things are being cut. They're seen as a cost and not a benefit, and that's a very particular lens to look through, isn't it? So not only is climate change at risk because of the withdrawal from the Paris Agreement in the United States, but also in home territory, those protections are being removed. So that's got implications for everyone. I suspect that the legal professionals in the United States will be working all out with lawsuits against the laws, outlawing their jobs and taking jobs away, and it's going to be a pretty nasty time. I think ahead. As the courts try to unravel some of the damage. As the courts try to unravel some of the damage.

Tony Hines: 7:39

Now, there seems to be somewhat of a paradox going on with US policy. The balance between regulation and deregulation often feels like a tightrope. On the one hand, the government imposes regulations to protect consumers, ensure fair competition and address environmental concerns. On the other, it simultaneously pushes for deregulation to promote business growth and reduce bureaucratic red tape. And this paradox is fascinating and complex. It has significant implications for the economy, trade and public policy. One of the most prominent examples of the paradox is the use of tariffs by the new president and his administration. Tariffs are essentially taxes imposed on imported goods, designed to protect domestic industries from foreign competition. While they can provide a buffer for local businesses, they often lead to higher prices for consumers and trigger retaliatory measures from other countries, escalating into trade wars, as we've seen in recent weeks. The balance between protecting domestic industries and fostering a competitive market is a very delicate one, and tariffs exemplify this tension.

Tony Hines: 8:50

Then there's the Department of Government Efficiency, doge. It's a temporary organisation led by Elon Musk. Created by executive orders, it's designed to streamline government operations and reduce wasteful spending. Thank you for watching. Its implementation involves creating new rules and frameworks, and that's where there's a paradox the effort to reduce regulatory burdens might in some way result in new forms of regulation. So what's all this to do with the impact on trade? Well, the broader question is whether these policies will harm trade or improve it.

Tony Hines: 9:37

The impact of deregulation can be both positive and negative. The potential benefits could be increased competition. Deregulation can be both positive and negative. The potential benefits could be increased competition. Deregulation can lower barriers to entry, allowing more businesses to enter the market and increase competition. Economic growth can be achieved by reducing bureaucratic red tape because businesses can operate more freely, potentially leading to economic growth and job creation. And there might be innovation. With fewer restrictions, companies might have more resources to invest in research and development, leading to economic growth and job creation. And there might be innovation. With fewer restrictions, companies might have more resources to invest in research and development, fostering innovation. No, we said might. Potential drawbacks Without regulations, there's a risk of market failure, where businesses might engage in unethical practices or monopolistic behaviours. Consumer protection might be harmed if deregulation reduces those protections, potentially leading to lower quality products and services. And the environmental impact of deregulation can lead to reduced environmental protections, which might harm ecosystems and public health. So this paradox is taking place right now as an experiment in the United States.

Tony Hines: 10:45

M23 rebels backed by Rwandan troops have captured Goma, the largest city in the Democratic Republic of Congo, and that's the mineral rich area. 3,000 people have been killed, according to the initial estimates. Four African states have sent troops to help Congo in Goma, but they've taken heavy losses too. The president, cyril Ramaphosa, has declared himself ready for confrontation with Rwanda's Paul Kagame. So supply chain disruptions for what comes out of the Congo. Cobalt, of course, is the biggest export from that particular area of Africa. Ups announced this week it was reducing the number of shipments it handles from Amazon by 50%. It wants to focus more on profitable business. The US Postal Service recently adjusted its fees, shaking up the economics of parcel deliveries. Ups's share price has gone down by 15%. The chief executive, carol Tome, says she wants to take control of the future destiny of the business.

Tony Hines: 11:52

Panama's president this week, jose Raul Molino, announced that he wouldn't be renewing an investment agreement with China. This came after a visit to Panama by Mr Rubio, who warned the government there to take immediate steps over what he said was China's influence and control over Panama, particularly the canal. You'll remember that President Trump has repeatedly said he was going to take the waterway away from them if they didn't do something about it, and that's been reported in a previous episode of the Chain Reaction Weekly Roundup. El Salvador also received a visit from Mr Rubio, where their president, nayib Bukhali, offered to outsource the country's prisons to America. You'll remember the furore in the past couple of weeks about DeepSeek and its development by the Chinese organisation, backed by the government in China and a fraction of the cast of the American tech companies. But there's some concern about DeepSeek with its Chinese origins and this week Australia banned DeepSeek's chatbot app and the website from all government devices. Taiwan has done the same and the website from all government devices. Taiwan has done the same.

Tony Hines: 13:04

The UK government has backed with £22 billion worth of taxpayers' money unproven technology, according to the eye, to capture and store carbon emissions. It's high risk. Mps have been warned. The Parliamentary Public Accounts Committee said the government needs a better assessment to convince that this is something worth spending money on. Taxpayers are already paying higher energy bills and there's a cost of living crisis, and this high degree of uncertainty with this project, which could turn out to be a white elephant, needs to be better thought through.

Tony Hines: 13:41

President Trump lifted the de minimis threat to cut it that was which he announced this week and put it back in place within 24 hours, and I'm guessing this was because the Postal Service and various other things happened in that period to make the president pause for now. Of course, if it went ahead, the two big Chinese companies that would suffer most would be Shein and Temu, who, between them, account for about 30% of those de minimis imports into the United States from China, and it would also hit Shehan's listing prospects on the London Stock Exchange. It was estimated this week that it would lower the value of the company by a quarter if De Minimus came in. So that's how important that De Minimus loophole is to those two companies. Trump, of course, has also imposed tariffs against the BRICS that's Brazil, russia, india, china and South Africa and when we look at those countries, if we compare them, say, to the G7 countries, back in 1980, the G7 countries were worth about 6% of the world economy, which was about $724 billion at that stage, and the 2025 forecast is that they'll be worth 26% of the world economy, which is $37 trillion. Of course, china accounts for about 70% of that BRICS GDP figure, so it's the biggest player in BRICS.

Tony Hines: 15:22

Don't forget to subscribe to the podcast. You'll be first to know when new episodes are coming your way and you can always message us through the text message on the episodes on the Chain Reaction website, look forward to hearing from you. Well, that's it for this week's episode. It seems to be all about the macro environment at the moment, with trade and tariffs and, of course, us policy and big governments everywhere all trying to get their own way to get to that future first and take control, and that has implications for everybody, and for supply chains in particular, while supply chains are trying to grapple with the day-to-day operations of moving goods and services from where they're made to people who want them in the market. Well, I'll be back next week with another episode of the Chain Reaction Podcast and I look forward to speaking to you then. Let's hope it's not quite as turbulent as this week. I'm Tony Hines, I'm signing off and I'll see you next time. Take care bye, for now. You've been listening to the chain reaction podcast, written, presented and produced by tony hines.