Tariffs, Tankers, And Turning Tides

Tariffs are see-sawing, tankers are rerouting, and AI is sprinting ahead—this week’s supply chain story is as volatile as the markets reading it. We unpack how a Supreme Court ruling triggered tariff whiplash, why the cost burden falls on domestic firms, and what that means for pricing, inventory, and strategic sourcing in the months ahead. Along the way, we dig into freight turbulence at the world’s tightest chokepoints, from the Red Sea to the Strait of Hormuz, and trace how war risk premiums, insurance surcharges, and longer sailings are reshaping landed costs and customer commitments.

We also map the corporate chessboard. Netflix backs away from a blockbuster media deal and is rewarded by investors who prefer capital discipline, while automakers and luxury brands trim headcount to brace for softer demand and rising input costs. On the technology front, Meta expands GPU supply agreements across Nvidia and AMD as compute needs explode, and logistics leaders double down on predictive AI to turn vast data streams into earlier warnings and faster decisions. The theme is unmistakable: resilience beats narrow efficiency, and firms that layer analytics on top of diversified networks will navigate shocks with fewer misses and fewer write-offs.

Looking forward, we highlight how regionalization, port and terminal investments, and additive manufacturing can reduce exposure to geopolitical flashpoints and long tooling lead times. 3D printing’s ability to produce low-volume, high-mix parts on demand offers a practical lever to stabilize service levels when shipping lanes snarl. We close with a sober update on escalating tensions around Iran and the likely spillovers into freight markets, delivery promises, and working capital. If you’re rethinking your network design, supplier mix, or buffer strategy, this conversation lays out the key moves and the trade-offs behind them.

If this helped you see your supply chain with fresh eyes, subscribe, share the show with a colleague, and leave a quick review to tell us what you want covered next.

Transcript

Welcome And Context

Tony Hines 0:00

Hello, Tony Hines here, you're listening to Chain Reaction, all about supply chain advantage. Great to be here. Thanks for dropping by today. Great episode coming your way in just a moment. So 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. In the dark days of winter, it's difficult to see when summer or spring even will arrive again. But it will, just as surely as the tide changes, as surely as the sun comes up every day. And as surely as it rains, things will change. Hello, Tony Hines here. Thanks for coming by today. Great episode. All about what's been happening in supply chains in the past week since you've been away. When the Supreme Court in the United States ruled against Donald Trump's tariffs under the Emergency Powers Act, the President was quite annoyed and accused members of the Supreme Court as not being American, not having American interests at heart, but failed to recognize that what they were delivering was justice under the law. He immediately retaliated and said he would slap a ten percent global tariff on everybody. That was on Friday. On the Saturday, he said he'd put that up to fifteen percent. And then on the Tuesday, when those tariffs came into force, he reigned it back to ten percent. The president imposed the levy under a statute from 1974, when his previous tariffs under AIPA were struck down. The court decision didn't say whether refunds should be issued. For tariffs collected under the disallowed policy, that will be left to lower courts. FedEx has been the first large company to sue the government for a full refund of the duties that it had to pay. But make no mistake, this will be a slow legal process, with lawyers wrangling the rights and wrongs of tariffs. President Trump did say he would raise global tariffs eventually to 15%, but that's angered many countries that have struck trade deals or are negotiating with America currently. Lawmakers in the European Parliament immediately suspended the ratification process for the EU's agreement with America, though the EU Trade Commissioner said respect for the deal was paramount. President Trump warned countries not to play games, or they'd face even higher tariffs. But quite how he's going to do that, with his hands tied behind his back by the Supreme Court. Well, that's uncertain. The American economy grew by 1.4% in the fourth quarter of 2025. And that's a big drop from the 4.4% that was recorded in the third quarter. The Bureau of Economic Analysis said that the long government shutdown had shaved one percentage point off the quarter's growth rate. The economy overall expanded by 2.2% in the whole of 2025, and that's the slowest pace since the pandemic year of 2020. The yen fell sharply against the dollar this week after Takeishi Sanai, Japan's Prime Minister, nominated two dovish candidates at the Bank of Japan's policy board, Asada Toshiro and Sato Hayano. Support economic stimulus and lower interest rates. And that would put them at odds with the central bank's governor, Yueda Kazuo. He was inclined to raise rates. Paramount raised its hostile takeover of Warner Brothers this week from $30 a share to $31 a share. And the Warner Board said this was a superior proposal to the deal it's accepted from Netflix, and it said it would engage with Paramount, but that the merger agreement with Netflix remained in effect. But actually, Netflix, on hearing this news, withdrew their offer to buy Warner Bros. And guess what happened to their share price when they'd withdrawn? Netflix share price rose by nearly 15% after the deal was called off. So it shows what the markets thought. This is obviously protecting profits and capital allocations. So it's seen as prudent on the part of Netflix to step back. So the shareholders in Netflix think this is a good move by that company to withdraw from the Warner Brothers deal. This now leaves Paramount to take over Warner Brothers if they can agree terms. Well what's been happening this week in lots of major businesses is that they're shedding jobs. Aston Martin has cut its workforce by twenty percent as it struggles to generate cash and manage its debt. The British luxury car maker blamed tariffs in part, saying that they'd been extremely disrupted to its business. But there were other companies in the news this week also cutting the labour force, and one of those in the UK was a cardo. They're said to be rolling back on costs. So I think we're going to see lots of companies looking at their costs quite hard and looking at ways to reduce those. And does this signal that there may be some kind of recession coming down the line? Well, perhaps those companies know more than governments do at the moment. And the tariffs will have played their part in this, because they've caused chaos. Meta announced that AMD will supply graphic processing units to help power its AI infrastructure. Under this deal, Meta could take a stake of up to ten percent in the chipmaker. Of course they're all desperate these companies to satisfy their large appetite for computing power. And Meta has also recently reached a chip supply agreement with Nvidia. It's planning to spend one hundred thirty five billion US dollars this year on AI, so big budgets for AI at the moment. Nvidia produced another stellar set of quarterly earnings. Revenues have risen seventy three percent year on year to sixty eight point one billion dollars. And the net profit? Not bad, forty three billion dollars. Up by ninety four percent. Computing demand for AI is growing exponentially. It's shooting for the stars. The government in Panama said Moller Mersk and MSC, two very large European shipping lines, were now operating two ports on the Panama Canal. Back in January, the country's Supreme Court annulled the contract for CK Hutchison, a Hong Kong conglomerate, to run various facilities. The Panamanian president said that Hutchison had established an autonomous territory at the Vital Waterway during its decades-long operations. The takeover is described as unlawful. The Strait of Hormuz remains the world's most concentrated energy corridor. It carries 20 million barrels a day of crude oil. Over a quarter of global seaborne oil trade and 20% of global LNG flows through that strait. It's a choke point. Freight markets are repricing sharply. VLCC charter rates are exceeding $200,000 a day, driven by war risk premiums, rerouting and congestion. Red Sea security operations are extended. The EU has extended its Aspired naval mission in the Red Sea to 2027, reinforcing protection of vessels transiting the Babel Mandeb and Hormuz corridors. Critical arteries for global trade. Saudi Arabia strengthens Red Sea logistics dominance. Bersk has acquired a 37.5% stake in Jeddah's South Container Terminal, deepening its integration into Red Sea trade routes and aligning with Saudi Arabia's vision 2030 logistics ambitions. A parallel DP World APM terminal partnership further consolidates Jeddah as a regional logistics hub. There is of course a risk of renewed disruption. Analysts warn that any escalation involving Iran could again destabilize Red Sea and Hormouth's shipping, raising freight costs and forcing rerouting. When it comes to freight markets and global shipping conditions, Red Sea rerouting continues despite fewer attacks. Carriers are cautiously resuming Red Sea transit, but many still route via the Cape of Good Hope. The Asia Europe journeys remain 7-20 days longer, with elevated freight rates and persistent scheduling delays. Structural impacts from the Red Sea crisis, the Houthi attacks since 2023, have cut sewers canal traffic by 57%, forcing widespread rerouting and driving up insurance and spot freight rates. The crisis has exposed vulnerabilities in just in time supply chains and contributed to inflationary pressures. Global choke points reshuffle. Red Sea disruptions have pushed volumes around the Cape of Good Hope upwards by 65%, with sewers canal volumes falling by 57%. Other corridors, Gibraltar, Dover have absorbed displaced flows. Now let's turn to technology, AI and supply chain resilience. FedEx invests in predictive AI for disruption management. It's developing AI models powered by two petabytes of daily data to anticipate vulnerabilities and prevent local issues from becoming systems failures, positioning AI as a core capacity for the next fifty years of its network. AI driven globalization shifts. AI is accelerating a transition from efficiency optimized global supply chains to regionalized intelligence driven ecosystems. Only eight percent of firms surveyed have fully integrated AI driven planning, but leaders like Unilever report billions in value from AI enabled operations. There have also been corporate moves and logistics networks expansions that we need to talk about. Fast Freight expands global reach. It's acquiring Omnitrans, extending its capabilities into Asian North American trade lanes, and strengthening its end-to-end freight forwarding and customs brokerage. In education, Centennial College in Canada and Multimix Academy in Africa are launching new programs and advisory boards to address global supply chain talent shortages and align training with industry needs. I'm guessing many places around the world will need to do this to ensure they have the right match of skills and talent coming through that pipeline to supply the supply chain professionals and trade professionals of the future. What can we learn from what's happening generally in a strategic sense? Well resilience is overtaking efficiency as the organizing principle of global supply chains. Choke point exposure in those Hormuz Straits and Babal Mandab sewers remain dominant as a systemic risk. AI enabled visibility and decision autonomy are becoming competitive differentiators. Regionalization is accelerating as firms rebalance risk across multiple hubs, and carrier and pork consolidation is reshaping global logistics power dynamics. US goods imports continued to outpace exports last year, and this of course led to the trade deficit going to a new high, despite the sweeping tariffs introduced by Donald J. Trump, which were going to be the saviour of the US economy. The gap between goods imported and those exported sold to other countries widened to 2.1% compared to 2024, which made it about $1.2 trillion, according to official figures. There was a sharp drop in trade with China, which was one of the earlier targets for the tariffs, but that seemed to have little impact. If you remember the White House said its key aim was to reduce that deficit, arguing that US reliance on overseas goods had hollowed out the country's production ability, and it was a national security risk. That's how they used the Emergency Powers Act to introduce tariffs. But of course they've been ruled illegal right now. So though all those reciprocal tariffs that came in on the first of April, April Fool's Day, well they're no longer legitimate. But of course, the president has decided to invoke the 1974 law to put those tariffs back in place at ten percent for the time being. The Bureau of Economic Analysis noted that Trump's tariffs regime reached a record of 3.4 trillion in the early part of the year as companies tried to avoid those later tariffs. They tried to beat the tariffs in effect. But the growth of artificial intelligence in the United States, of course, has put demand right up for all those chips and computer parts that have to come in, mainly from guess where? China. But of course they take convoluted routes. They don't come directly from China all the time. Sometimes they go via different countries. So tariffs probably aren't going to do the trick in the way the president thinks that they will. So while the president fiddles around with numbers, putting tariffs up and threatening to put them up more from ten to fifteen percent under this temporary law from nineteen seventy four, because he can only raise tariffs for one hundred and fifty five days using that one, I think. The research released by the Federal Reserve Bank of New York, which is a group of analysts and economists, basically found that the average tariff rate on imported goods rose to 13% from just 2.6% at the start of the year, before Trump became president. They also found that ninety percent of the cost of the increased tariffs which Trump imposed on goods from Mexico, China, Canada, and the European Union was paid for by US companies. So it's a myth that the president pushes forward, saying everybody else pays the tariffs to make us rich. That's complete nonsense. US firms and consumers continue to bear the bulk of the burden from those tariffs imposed in 2025 and 26. And just to illustrate the fact, big auto companies like Ford have said that they paid an extra $900 million in tariffs last year. That's nearly a billion in tariffs, which were imposed by the president. Additive manufacturing is the family of technologies that create objects by building them up layer by layer. And that's very different than the traditional way of cutting material away, which is subtractive, or forcing it into a particular shape, which is formative. And that single shift from removing material to adding it changes cost structures, design rules, supply chain models, and even what kinds of products can exist. Additive manufacturing is often called 3D printing, and it refers to a set of processes that turn digital models into physical objects by depositing material in successive layers. Each layer is a thin cross section of the final part, and the machine repeats and repeats until the object is complete. Now we've got a very special program coming up where I talk to Bindiya Vakil, who started a new venture in the United States called Accio 3D. But although it's based in the United States, it plans to operate everywhere around the world. So have a listen to that episode. It's coming down the track, and don't forget to listen carefully. Some very big lessons, and it's the future. Well, we've got some breaking news. Just as we're about to go to press this week, Operation Epic Fury began, and that's Israel and the United States attacking Iran. So the poignant comments in this episode about problems with supply chains in the Red Sea, around the Straits of Hormouth and through sewers are likely to get worse. So that means more cost for companies shipping from Asia to Europe and beyond. And we don't know where this is going to lead. But that's the breaking news. Well that's it for everything happening in supply chains that I hope you'll find interesting this week. And don't forget, if there are any episodes that you've missed, drop by and make sure you pick those up and have a listen. And also don't forget to read the chain reaction review online. Interesting articles maybe to catch up on. And of course, make sure that you share these podcasts with people you think might be interested. Because that way it helps everybody sharing that supply chain advantage. I'm Tony Hines, I'm signing off, and I'll see you next time in Chain Reaction. Until then, take care, bye for now.