Supply Chain Disruption in the Age of Uncertainty

The global economic landscape is transforming before our eyes as protectionist policies gain momentum worldwide. This episode of Chain Reaction examines how these shifts are creating both challenges and opportunities for supply chain leaders navigating increasingly complex waters.

We dive deep into the impending August 1st tariffs from the Trump administration, which include a striking 50% tariff on copper aimed at boosting domestic production. The immediate market response reveals a fascinating divergence – copper prices soaring in New York while simultaneously falling in London, creating a 25% price gap between markets as traders anticipate contracting global demand.

The Port of Los Angeles tells a revealing story of companies rushing to beat these tariffs, reporting its busiest June in 117 years with an 8% volume increase year-over-year. This front-loading creates an artificial peak season that masks a looming "inventory cliff" – businesses are currently burning through pre-tariff stock, but what happens when these buffers run dry? We explore how this dynamic will force difficult decisions about pricing, sourcing, and market strategy in coming months.

Beyond tariffs, we unpack the profound shift in regulation affecting global trade. Between 2015 and 2025, non-tariff measures like safety standards and environmental controls have surged from 53% to 72% of trade-impacting regulations. These measures create compliance burdens that disproportionately affect developing economies and drive strategic shifts toward "friendshoring" and regional supply networks. Yet this presents a fascinating paradox – evidence from the pandemic suggests that truly resilient supply chains rely on global diversification rather than localization. Could today's push for regional supply chains actually increase vulnerability?

For supply chain leaders, this environment demands new approaches: reconfiguring risk exposures, investing in real-time data capabilities, and engaging proactively with regulators. Join us as we examine these strategic imperatives and explore how forward-thinking companies are pa

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Chapters

• 0:00 Introduction to Chain Reaction
• 0:38 Tariffs and Economic News Updates
• 3:19 Tale of Two Cities: London vs NY
• 9:35 Port of LA Volume Surge
• 10:45 Global Insights Report Analysis
• 15:35 Impact of Trade Regulations
• 21:30 Resilience Paradox in Global Supply Chains
• 23:07 Closing Thoughts

Transcript

Tony Hines: 0:01

Hello, tony Hines. Here You're listening to Chain Reaction, all about supply chain advantage. It's great to be here and thanks for dropping by today. We've got a great episode coming your way in just a few moments. Stick around, stay tuned, stay informed. Subscribe to Chain Reaction. You'll be first to know when new episodes are out, and it's easy to do On your favourite platform. Find the subscribe button when you're listening, hit it and, hey presto, you'll be on the Chain Reaction subscription list.

Tony Hines: 0:38

Well, the tariffs come into force on August 1st. These were delayed reciprocal tariffs for countries who hadn't yet reached agreement with the United States. Only Britain and Vietnam have agreed to frameworks so far. Canada, china and Mexico are being treated separately, and then Japan and South Korea would face 25%, and a whole host of other countries come into play too. Mr Trump has also announced that he will impose a 50% tariff on copper, starting on August 1st, to encourage domestic production of the metal. The price of copper soared on the New York markets, but fell on the London Metal Exchange as traders bet that global demand would drop, leading to a huge 25% premium between New York and London prices.

Tony Hines: 1:31

Linda Iaccarino has announced that she's stepping down as chief executive of X, the platform that's run by Elon Musk, formerly known as Twitter. She's held the job for two years and no reason has been given for the departure. The main interest rate in Australia remains on hold at 3.85%. Inflation in India this week remains at 2.1%. The UK's public finances are on a knife edge. According to the Office of Budget Responsibility, underlying public debt as a share of the economy is now at its highest level since the early 1960s.

Tony Hines: 2:15

Nvidia this week became the first $4 trillion company. They make AI chips company. They make AI chips and of course, the demand for those has soared and it's seen its share price rise by 45% since early May. Apple has appointed a new chief operating officer, sabi Khan. Apple is reportedly seeking to buy the right to broadcast Formula One racing events in America, and this follows on the success of the Brad Pitt film of the same title. F1.

Tony Hines: 2:49

Sheehan has filed documents to float its share offer in Hong Kong. It's given up on the London listing because it became too fraught with difficulties and couldn't meet the compliance aspects. And couldn't meet the compliance aspects. The London listing took a hard look at the supply chain of Xie and was concerned about its Xinjiang operations, where China has suppressed the Uyghur population. A Tale of Two Cities was written by Charles Dickens, but today I'm going to talk about A Tale of Two Cities, just very briefly. And yes, it's London, but not Paris this time, new York. Let's consider London and New York as two barometers of trade in both of those countries.

Tony Hines: 3:49

In the United Kingdom, welfare is a big concern and cause. With an aging population, the burden of tax is falling on a smaller group of people who have to sustain those welfare benefits and just recently the United Kingdom had to backtrack on cuts to welfare because that doesn't sit well with the Labour government. And of course, the problem with that in an economy that's troubled is you have rising debt to fund the welfare payments and everything else and you have limited ability to raise taxes because of the commitments that the Labour government has given not to raise taxes on working people. So all that's causing a place between a rock and a hard place, as they say. It's very difficult to reconcile the two. The one thing about the United Kingdom, of course, is because of the economy and where it sits in the world, it's able to offer good value for investments and, of course, for services, and the service economy in the United Kingdom is a particular strength, and so if you're looking for a bargain, well, you could do worse than shop in the United Kingdom, where you've got a very large talent pool of people who are highly skilled, but they're not going to cost you as much as perhaps as if you were in New York.

Tony Hines: 5:28

If you're in the United States, the problem they have is they also need higher tax takes to fund the federal government's ambition, and Trump is attempting to do that through higher tariffs. He's already bringing in extra income through the tariff program, but of course that upsets all the countries that he's dealing with in trade and it hits the companies in the United States quite hard. They're absorbing much of the burden of those tariffs currently, and the way they're doing that is through inventory. They have an inventory buffer. They bought things, lots of things, ahead of the tariffs coming into play, and they're running through that inventory to supply and meet demand. But what happens when the inventory runs out? Well then it'll be like falling off a shelf, because the next time you buy in the inventory it's at those higher prices because of those higher tariffs, and that's when it will really bite. And will it be tolerated? Difficult to see. I think businesses will shout louder, there'll be lots of pressure on the US government to do things differently, and eventually it will result in some kind of equilibrium, as it always does.

Tony Hines: 6:51

The one thing about America, of course, all the reshoring effort by Trump that's what he hopes to happen would be quite expensive, because labour costs in the United States are much higher than in the countries where those goods are currently made, and even despite the transportation cost into the United States, they still come in at much lower prices than they would if they're made in the United States. And so there's a competitive issue which is a problem for the United States. So there, briefly, in a nutshell, is a tale of two cities and what's happening through the lens of global trade. The competitive problem I referred to can be resolved, of course, in both the United Kingdom and the United States through productivity. If you can produce more with a smaller set of resources, then that will create more value in the economy, and of course that's what governments in those countries are hoping for. By reducing the amount of labour in products, that reduces the cost of those products or services. And, of course, artificial intelligence is seen as one way to actually leverage more value and perhaps increase productivity as we move forward. But the question is will that switch happen fast enough or will the crisis be on the doorstep before it happens?

Tony Hines: 8:27

Changing reactions. John Kenneth Galbraith was a Canadian economist and he wrote an interesting book back in the 1970s called the Age of Uncertainty. Well, we're now in the Age of Uncertainty too, I think, with what's going on in global trade and lots of self-induced disruption by policymakers and governments who are trying to disrupt economies so as to gain advantage when the world appears to be fracturing from its normal positions and everything around appears to be uncertain. Well, of course, as a CEO of a corporation, you've got to try and maintain a profit position. You need to make sure that you're not badly affected in the outcomes that are happening around you and to do that you've got to read the geopolitics and you have to know your external environment and how it's going to impact your particular business.

Tony Hines: 9:41

The port of Los Angeles has seen a notable volume increase this month, continuing the momentum from June's record-breaking throughput. In June it handled 892,340 TEUs. That's up 8% from June 2024. The busiest June in the port's 117-year history, driven by importers front-loading shipments ahead of August 1st tariffs, especially for holiday inventory. In July, port officials, project 950,000 TEUs, boosted by extra vessel calls and accelerated deliveries. And accelerated deliveries. This surge is part of an early peak season, with retailers and manufacturers racing to beat trade uncertainty introduced by the president, we may add. Despite July's spike, forecasts suggest a double-digit volume dip from August through to November as inventories settle and tariffs begin to bite.

Tony Hines: 10:45

Now let's take a look at the Global Insights Report what's happening around the world this week, so we can see what sort of strategies we might invoke for our own supply chains. In summary, us trade tensions reignite proposals for steep tariffs on copper 50%, canadian goods 35% and EU-Mexican imports 30%. Diesel supply is tightening globally, with US and European inventories at multi-year lows. Brent crude peaked at $87 a barrel this week before retreating below $70. The UK economy contracted for a second consecutive month and that's prompted the Bank of England to signal a potential rate cut, possibly as soon as August, at 0.25%. Central banks in Australia, israel and Romania held rates steady, while Malaysia and Uruguay surprised markets with cuts. The IMF forecasts that the US is the primary driver of global growth through 2025, while China's domestic consumption remains lacklustre.

Tony Hines: 11:46

If we take a look at the US tariffs, the Governor of the Bank of England, andrew Bailey, has warned that escalating protectionism could fragment the global economy, dampening long-term growth prospects. The potential impact on supply chains, of course, manufacturers reliant on copper facing put cost volatility. Automotive and aerospace sectors could see higher material costs and slower production and trade diversion towards lower cost suppliers in Latin America and Asia likely. When it comes to energy, diesel stocks in the United States and Europe are at a five-year low and the implication there refining margins under pressure, transport costs rising. Brent crude peaked at $87, but only momentarily. It's back down again. It's around $69, $70. And the volatility driven by Middle East tensions and demand concerns continues. For natural gas, that's up 8% week on week in Europe and utility bills and industrial input costs are going to push upwards.

Tony Hines: 12:52

The Reserve Bank of Australia, the Bank of Israel and the National Bank of Romania kept rates unchanged 4.1%, 5.5% and 7% respectively. There were surprise cuts in Malaysia to 2.75% and the Central Bank of Uruguay to 6%. The British pound slipped 0.6% this week as the US dollar surged upwards and that was to do with growth concerns. Nothing to do with the dollar. It was to do with growth concerns. In the United Kingdom, us retail sales rose 0.4% in June and that's because of resilient consumer demand, underpinning upward revisions to Q2 GDP forecast. Eurozone industrial output fell 0.3% month-on-month and Germany and Italy led the decline due to softer external demand. The IMF has said global growth is likely to be 3.1% in 2025, driven by 2.3% from the United States on the strong service sector and China 4.8% growth, but weighted down by subdued domestic spending, geopolitics and flashpoints.

Tony Hines: 14:03

The Middle East tension threatens energy prices. Us-china rivalry, intensifying supply chain reconfigurations and Latin America debt vulnerability could spur volatility. So in the round the supply chain implications, material cost inflation from tariffs and energy prices may squeeze margins for manufacturers and logistics providers. Firms should re-evaluate supplier portfolios, exploring near-shoring to Europe and Southeast Asia to mitigate tariff risk and inventory strategies have to balance holding costs against disruption insurance. Consider pilot programs for demand-driven replenishment and dual sourcing. Many firms at the moment are spending a lot of management time conducting scenario analysis on tariff rollout issues. They're trying to quantify the effect on their P&L and they're looking at that by region and commodity. They're also trying to model energy prices as they pass through the supply chain to the end customer and you need to take a look at how your key product lines are going to be affected and they're exploring hedging strategies, looking to buy foreign exchange forward where the foreign exchange is volatile, looking at commodity swaps to stabilize cost bases and so on. And they're looking at ESG opportunities to align suppliers in lower tariffs jurisdictions to strengthen circular economy credentials.

Tony Hines: 15:35

There are probably more policies today by governments around the world that hinder trade than actually enhance trade around the world that hinder trade than actually enhance trade. I suppose governments in the past have tried to support trade of their own nations and they've always sought out advantage. But today's regulationary environments encourage more than that. There are means to try and control trade supposedly in more effective ways, but actually they do more bad than good and they hinder and add friction to supply chains, and I suppose that's inevitable in the protectionist attitude of many states. And, of course, now the country probably once more famous for its free trade policies has joined the race to become the king of regulation, with Donald Trump as the king.

Tony Hines: 16:36

Trade is no longer just about tariffs, although tariffs have increased under Donald Trump's administration. They're more about national security, industrial policy and sustainability, and they're all shaping cross-border flows. Examples are the US CHIPS Act, the EU Carbon Border Adjustment Mechanism and the UK's Critical mineral strategy. They've all introduced sector-specific controls aimed at protecting domestic capabilities. There's been an impact on ESG and circularity. Regulations such as export bans on rare earths threatened clean energy and its ability to scale. It's also driven recycling and local sourcing. Then there are sustainability standards, such as the EU deforestation laws. It enhances traceability and due diligence and it incentivizes regenerative sourcing models. And then, of course, there's digital customs and traceability, increasing order transparency, and it supports closed-loop system tracking. Interconnected policies require cross-functional insights, trade decisions, ripple-through logistics, compliance, marketing and even consumer trust. When Brazil introduced emissions-based labelling for agri-exports, firms had to rethink sourcing, labelling and transport strategies simultaneously. When we're thinking about adaptive supply chain strategies, reconfiguring risk exposures, shifts towards friendshoring and multisourcing to avoid choke points, investing in agility agility, real-time customs data and ai driven compliance forecasting are fast becoming baseline capabilities and co-designing with regulators. Leading firms now partner with trade ministries to pilot digital customs and blockchain traceability.

Tony Hines: 18:42

The surge in trade regulation isn't just a challenge. It's a strategic inflection point. Supply chains built on siloed cost efficiency are giving way to resilient, principle-driven systems that align geopolitics with circularity and stakeholder value. When we look at key trends in trade regulation between 2015 and 2025, there's been a rise in non-tariff measures NTM's While average global tariffs fell from 13% to 7%. Ntm's, like quotas, safety standards and environmental controls, surged from 53% to 72%, and these measures often require complex compliance, especially for developing economies. There's been an explosion of trade restrictions Over 2,600 new restrictions were imposed in 2022 alone, and that's six times higher than they were in 2013. And the sectors affected include semiconductors, vehicles, agriculture and strategic minerals. There have been sanctions and export controls. These are used increasingly as foreign policy tools, especially in response to conflicts for example, the Russia-Ukraine war and tech competition, for example US and China. Restrictions now target outbound investment, critical minerals and high-tech sectors.

Tony Hines: 20:17

Then there's geoeconomic fragmentation Trade flows are shifting towards geopolitically aligned blocks, reducing geopolitical distance between trading partners. This fragmentation risks long-term GDP losses and supply chain inefficiencies. And there are regional trade agreements. Despite rising protectionism, rtas are gaining momentum, for example, cptpp expansion, afcfta progress and EU bilateral deals. These offer partial buffers against global fragmentation. What are the strategic implications for supply chains? Well, obvious one higher compliance burdens. Firms must navigate overlapping regimes and divergent standards. Friendshoring and nearshoring Businesses are restructuring supply chains to reduce exposure to hostile jurisdictions. And for digital trade and e-commerce, regulatory gaps and concentration risks are emerging in fast-growing digital sectors. So you can see, this is something to keep an eye on. The trend is upwards and regulation is everywhere.

Tony Hines: 21:31

One outcome of trying to build resilient supply chains has been almost contradictory in its approach. It's tried to build that resilience by pushing supply chains more regional or more local and moving away from global trade. But it's a paradox really, because resilience has been built through global supply chains. Global supply chains allow businesses as well as governments to reduce their risk by ensuring supply from whatever part of the globe it's needed from. And the push towards more local supply chains could actually work against that, making supply chains far less resilient than they have been. And if you want the evidence for that claim, you've only got to look at the pandemic. For that claim, you've only got to look at the pandemic. During pandemic times, resilience in supply chains was maintained through global supply chain activity.

Tony Hines: 22:38

Well that's it as we close out this week Inflation in the United States, we said 2.6% and, of course, in the United Kingdom 3.7%. So we'll wait and see what the central banks in the US, the United Kingdom and, of course, in the European Union do in the next coming weeks. And we've also taken a look in this episode at what other central banks are doing around the world. So I hope you've learned something. I hope you've enjoyed the episode, and I'll be back with another edition of Chain Reaction next week. Until then, take care, I'm Tony Hines. I'm signing off. See you next time. Bye, for now, you've been listening to the chain reaction podcast written, presented and produced by tony hines.