Winners And Losers In 2026 Supply Chains

The ground under global trade is moving, and we trace the new lines with data, stories, and a practical playbook. From China’s record-breaking surplus to the EU’s carbon border levy and a surge of nearshoring into Vietnam, India, Mexico, and Eastern Europe, we follow the signals that show supply chains aren’t shrinking—they’re rewiring. We unpack why tariffs now act like a permanent tax on complexity, how logistics networks with multi-route options win when choke points flare, and where AI-driven visibility is turning turbulence into an operational edge.

We bring together policy shifts and boardroom choices: the United States hardens average tariffs on Chinese imports, Brussels pushes CBAM that rewards low-carbon, traceable suppliers, and Mercosur talks hint at a new Euro–South America corridor. Meanwhile, shipping lines test returns to the Red Sea, freight costs recalibrate, and retailers pay for bloated inventories as demand whipsaws. On the factory side, automation compresses labor arbitrage, making regionally balanced footprints more attractive once risk, lead times, and carbon costs are counted.

Expect clear takeaways. We detail who benefits from the China-plus-one pivot, why single-country sourcing is now untenable at scale, and how control tower platforms, predictive planning, and supplier diversification reduce exposure to sudden tariffs or route closures. We also zoom out to the geopolitical layer—from NATO exercises in the High North to the rhetoric around strategic territories—and explain how these pressures filter into insurance, compliance, and transport reliability. If you manage supply chains, procurement, or manufacturing strategy, you’ll leave with concrete steps to build optionality, strengthen traceability, and invest in the data pipes that make fast decisions possible.

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Chapters

• 0:00 Welcome And Subscribe
• 1:10 China’s Record Trade Surplus
• 2:10 Tariffs Reshape Global Trade
• 2:55 EU Mercosur And Carbon Border Tax
• 4:00 Vietnam’s Rise And North America Tensions
• 5:05 Red Sea Routes And Freight Costs
• 5:45 Global Growth Under Strain
• 6:15 Winners In 2026 Supply Chains
• 8:35 Tech, AI, And Logistics Resilience
• 10:15 ESG Compliance And Traceability
• 11:05 Who Loses In The New Setup
• 13:20 Framework: Geography To Logistics
• 15:15 What It Means For UK Consumers
• 16:40 UK Macro Snapshot And Manufacturing
• 18:05 Greenland Tensions And NATO Moves
• 21:30 Playbook: Visibility And Contingency
• 22:45 Evidence: Surveys And Studies On Tariffs

Transcript

Tony Hines: 0:02

Hi, Tony Hines here, you're listening to Chain Reaction. All about supply chain advantage. It's great to be here. Thanks for dropping by today. Glad you could join us. Great episode coming your way in just a few moments. Stick around, stay tuned, stay informed, and stay ahead with Chain Reaction. Subscribe to Chain Reaction. You'll be first to know when new episodes are out, and you'll never miss an episode. Well, despite all the tariffs and all the news stories in the press this week, China has posted the largest trade surplus in world history. China's 2025 trade surplus hit 1.19 trillion US dollars, and that's the highest ever recorded. Exports grew 5.5% despite US tariffs under President Trump, causing a 20-30% drop in exports to the United States. China compensated by expanding exports to Europe and emerging markets. China's ability to re route exports shows global supply chains are adapting rather than shrinking. China tariff tensions continue to reshape global trade. The United States has entrenched a 37.3% average tariff on Chinese imports, more than double the previous levels. These tariffs are focusing companies to restructure supply chains and diversify sourcing across Southeast Asia and Latin America. It's the biggest structural shift in global trade since the early 2000s. The EU is preparing to sign the long-delayed Mercosur trade agreement covering Brazil, Argentina, Paraguay, and Uruguay. This follows years of environmental and political disputes. It would create one of the world's largest free trade zones and reshape agriculture and industrial flows between Europe and South America. France and Italy are seeking temporary exemption for fertilizers from the EU new carbon border tax, which began on January 1st. The EU may consider a suspension if food price inflation spikes. This CBAM agreement is one of the most consequential climate trade policies ever introduced. The United States has targeted Vietnam over rising trade surplus. Vietnam trade surplus with the US has now surpassed China's, prompting Washington to push for rectifying the imbalance. The United States is preparing a new ambassador focused specifically on trade enforcement. Vietnam has become a major winner from US China decoupling. Canada seeks to diversify away from US amid rising tensions. Canadian Prime Minister Mark Carney visited China to expand trade ties as the United States pressure and tariffs intensify. US rhetoric about Canada becoming the 51st state has severely strained relations. North American trade politics are becoming more volatile. Mersk has reported that a return to the Red Sea is being planned after successful test transits in December 25, but only if the safety holds. A full reopening would shorten Asia Europe shipping times and reduce freight costs. The global economy is resilient but weighed down by trade tensions. The World Bank and the United Nations reports show global growth holding around 2.6 to 2.7%, but that's far below pre-pandemic levels due to tariffs and policy uncertainty. Trade tensions are now a structural drag on global growth. Let's take a look at the winners and losers in global supply chains as we begin 2026. The winners, of course, are countries benefiting from near shoring and China's plus one. And that means Vietnam, India, Mexico, Poland, and the Czech Republic. These economies gain as companies are diversifying away from China and they begin to shorten supply chains. Near shoring and multi-country sourcing are top of the trend list in 2026. Fifty-eight percent of global executives expect more localized supply chains by 2030. Whether this is a good or a bad thing remains to be seen, but of course it will restrict choices in many cases and it will increase costs, likely. Firms with strong AI and automation capabilities for forecasting, inventory optimization and risk detection will be at the forefront of improvements in supply chains. AI is marked as the number one supply chain trend for 2026, and automation at a scale is accelerating across logistics and manufacturing. Logistics providers with resilient multi route networks are going to be winners. Carriers and freight forwarders that can reroute around geopolitical disruption, for example the Red Sea, Taiwan Straits, all those choke points around the globe, they're gonna be the winners this year. And control tower visibility platforms are in extremely high demand at present. Manufacturers with flexible multi-country production, they're gonna be a winner. Firms that can shift production between regions, for example, in apparel or electronics, are obviously going to win out. Agile and dynamic sourcing is in the top ten of 2026 trends. And of course, ESG compliance suppliers, with regulations increasing, companies with strong traceability and low carbon operations are gonna benefit from tightening EU and UK rules. ESG traceability is expanding rapidly in 2026. Now let's take a look at the losers. Countries heavily dependent on low cost long distance exports. Well they're gonna lose out this year. Bangladesh, Cambodia, and parts of China. As near shoring grows, long haul Asian exporters face margin pressures. Protectionist policies in 2526 are still reshaping those global trade flows, and of course, Trump's tariffs this year, or last year, are still doing a lot of damage to the global trade flows. Firms with single country sourcing, companies relying on one region, especially in China, face higher risks from tariffs, sanctions and shipping disruptions. 2025 geopolitical shocks have made single source models untenable. Business is slow to adopt AI and automation. Manual forecasting and legacy systems can't keep up with the volatility. AI is now considered core to supply chain efficiency. High carbon industries without traceability, the EU CBAM and global ESG rules which we've just talked about, will penalise carbon intensive suppliers. Firms lacking traceability systems are at a competitive disadvantage. And retailers of course with bloated inventories, well, they're gonna be in trouble. E-commerce volatility and high logistics costs are punishing companies with poor inventory discipline, with poor inventory discipline. Inventory pressure is a major 2026 challenge. Inventory pressure of course is always a challenge, but it's going to be more of a challenge in 2026. So if we look at it in a systematic way, we've got geography, technology, we've got the sourcing model, we've got the sourcing model, we've got ESG compliance, and we've got logistics as our categories. And the winners, as we've said, with geography, Vietnam, India, Mexico, and Eastern Europe, technology, AI and automation, and data-rich firms are going to be key to keeping ahead of the volatility of that volatility curve and the disruption that will happen due to geopolitical changes during the year. And then there's the sourcing model, multi-country, near-asured, and flexible. Flexibility, agility is key. ESG compliance, as we've said, low carbon, traceable supply chains going to win out, and multi route resilient networks are going to be winners. The losers, Bangladesh, Cambodia, China low value sectors. Any firms reliant on manual legacy systems are going to be at risk. Single country long haul and rigidity in supply chains is going to be problematic. High carbon opaque suppliers and carriers tied to a single choke point are at risk. What's it gonna mean for people getting their goods? More near shore goods from Eastern Europe, for example in the UK, faster lead times and higher reliability, higher costs for carbon intensive imports due to those EU UK carbon border measures, more competition for UK manufacturers from Mexico and India as they scale up, and opportunities for UK logistics and tech firms offering AI automation and traceability tools. In November twenty twenty five, zero point three percent for GDP. And of course the economy is still fairly flat. Growth mainly came from the service sector, so things like accountancy and those sort of things. But not in manufactured goods and not in lots of other sectors, which are still struggling. And of course the hospitality industry, which is in the service sector, is still struggling. And it's loaded with taxes. Taxes from government, central government, and taxes from local government too. The one bright spot in manufacturing, of course, was the recovery of Jaguar Land Rover, which accounted for some of that growth. So it wasn't all manufacturing, but manufacturing generally is down. The Office of National Statistics said that growth in the UK was 0.3% in November. Of course, there was a budget in the UK in November, but that hasn't had time to bite yet. I guess if that budget are to come out sooner, that growth might be lower. So it's fairly flat. Jaguar Landrover, of course, is uh back to normal production, and that will have had an impact, because it's significant in its contribution to the UK economy. President Trump still has his eyes set on Greenland, and Denmark's very unhappy about this, as are the Europeans generally. And as a result, there are likely to be European troops going to Greenland to carry out military exercises. Is this to stand up to Trump? Maybe. The United States, of course, is still Europe's greatest ally. The question might be, is Donald Trump? The limited deployment to Greenland has begun, and Germany, Sweden, Norway, Finland, the Netherlands, and the UK have all arrived with their contingent of troops to support Denmark. The US President Donald Trump continues to press his claim to the Arctic Island. It's a semi-autonomous part of Denmark. The French President Emmanuel Macron said the initial contingent would be reinforced with land, air and sea assets. It's the first exercise that NATO has carried out in Greenland, and it's significant. Trump has doubled down on his bid to bring Greenland under US control, and he says he'll do it either by negotiation, or he has said he would employ force if necessary. He's hoisted up a straw man. That's what many think, in the sense of Russia and China wanting Greenland. Russia has denied it, and so has China. But is Trump right? Well even if he is, shouldn't he be a little more diplomatic about gaining control? He can already put troops all over Greenland if he wants to. They have several bases that they left some time ago, the United States, and they can always reopen those bases. Why don't they just do that if he wants to secure the asset? Of course, Trump's a real estate person, isn't he? He wants ownership. Greenland does have mineral wealth, and is that what Trump wants? He wants to own those minerals? Or is it something more than that? Of course, security of what we're now calling the High North, meaning Greenland, is significant and important. Well, I suppose from some of the discussions we've had in this particular episode, you'd probably be thinking to yourself you should be investing in systems and technology that give you visibility across your supply chain, and you should be thinking how to make contingency plans faster given changes to geopolitics or anything else that knocks out the supply chains that you manage. And you'd be right, I think. A 2025 Cap Gemini survey of 1,400 executives with firms with revenue higher than one billion dollars found about two-thirds now have an active reindustrialization strategy, onshoring, nearshoring or friendshoring production to reduce exposure to global shocks, tariffs and trade disputes, obviously lowering risk for those businesses. This is a clear quantitative sign that many big firms are deliberately reducing exposure and reliance on long, far flung supply chains and shifting production closer to home or to politically aligned countries. Empirical evidence of rapid sourcing shifts when tariffs or uncertainty hit. A 2025 study on the US Liberation Day tariffs shows that when US tariffs were unexpectedly announced, firms rapidly shifted sourcing away from high risk countries to lower risk ones, even before tariffs fully took effect. That reallocation raised import prices and was strongest for firms with complex contract heavy supply chains, showing how even short bursts of trade policy uncertainty can significantly disrupt and rewire, reconfigure our supply chains. There's been some academic work on tariffs disrupting global supply chains too. A 2024 American Economic Review Paper modelled unanticipated tariffs in a world of firm-to-firm supply relationships, finding that surprise input tariffs force firms to renegotiate with suppliers or search for new ones, changing sourcing patterns and reducing welfare. That was done at Princeton University. Calibrated to US tariffs on China the paper estimates a welfare loss of about 0.12% of GDP, with a big chunk coming from disrupted input sourcing and higher search costs. And that's not just theory, it's a quantified estimate of how tariff shocks push firms to rethink global supply chains. The strategic shift literature, of course, simply says that tariffs are just one driver among many. A 2025 paper on strategic shift, navigating tariff supply chains and reshoring realities argues that tariffs have compelled firms to reassess their operational strategies, leading to diversification, near shoring, and more sophisticated risk management. It frames reshoring not as a full retreat from globalization, but a redesign of supply chains, to be more resilient and less exposed to tariff regimes and geopolitical risk. When it comes to consultants, McKinsey's 2026 work on manufacturing footprints describes how renewed greater power competition and geopolitical distance are putting pressure on sprawling global supply chains, but stresses that the story is far more complex than a simple retreat from globalization. Their analysis suggests firms are moving towards more flexible, regionally balanced footprints rather than fully abandoning global trade. Is this mainly about Trump's ambition or something broader? Trump is now being seen as a president with imperialist ambitions. Let's separate the politics from the mechanics. What the Trump era and post Trump tariffs did, US tariffs on China and later Liberation Day clearly raised trade policy uncertainty and increased the cost and risk of relying on Chinese or other targeted suppliers. Empirical work shows firms responded by shifting sourcing, diversifying suppliers, and sometimes resuring or resuring production. So yes, US tariff policy under Trump as it stands continued to modify supply chains, and it's been seen as a major catalyst for supply chain reconfiguration. But it's not just about one politician or just one country. Other powerful forces are pushing in the same direction. Geopolitical fragmentation and great power rivalry is causing change. McKinsey explicitly notes that renewed great power competition and geopolitical distance are reshaping manufacturing footprints and increasing pressure on global supply chains. Many countries are jockeying for position in the new global order that's developing. We probably learned quite a bit during the pandemic years of COVID 19, with poor closures and later disruptions, with shipping choke points. It taught firms how long and how vulnerable just in time supply chains could be. And then experience feeds into today's reshoring and diversification strategies along with the Tariffs. The regulations increasing all the time, ESG pressures, carbon border measures, human rights due diligence laws and ESG expectations make some global sourcing options more costly or risky, and it nudges firms towards more traceable, regional, or friendly suppliers. Then when it comes to technology and automation, as automation reduces the labour cost, advantages of offshoring become not so great. The economic case for producing far away becomes weaker, making near shoring more attractive when you factor in risk and lead times. But of course, you've got to weigh up those economics, because lowering cost has to be achieved through automation and of course productivity. So if countries can become more automated using AI and they can lower the risks, they can also lower the costs by increasing productivity. So what's actually happening? If we strip it all back, we can realize that the evidence shows firms are not abandoning global supply chains altogether, but they are diversifying suppliers and countries. They're reassuring, they're near shoring some production, and they're redesigning their networks to be more resilient and politically safer, lower risk. Tariffs and US trade policy in the Trump era are a big part of the disruptive story that we've heard over the past year or so. But they sit inside a wider context of geopolitical rivalry, pandemic era lessons, regulatory and ESG pressures, and technological change. So it's less one man's imperial ambitions that broke global trade, and more a stack of shocks and power shifts exposed how fragile old school type global arts supply chains actually were, and firms are now quietly rewiring them. Well that's it for today's episode. Hope you've enjoyed it. Hope it's given you some food for thought, and I hope it helps you. Now don't forget there's some great episodes on chain reaction, and you should stop by and pick some up and have a listen. Pick topics that interest you and see what I had to say on those particular topics. And if you want to find out a little broader, then try Wittgenstein's poker. It's a recent episode, and I think you'll like it when you listen to it. Well, I'm gonna leave it there. I'm signing off, I'm Tony Hines, and I'll see you next time in the Chain Reaction Podcast. Until then, bye for now.