It is widely acknowledged that President Trump’s economic and geopolitical policies have the potential to significantly impact trade and business on a global scale.
From a procurement and supply chain perspective, several key topics are likely to require close attention in the days and months ahead.
Supply chain security and stability
Since the end of World War II, the United States and its allies established a global security framework, often referred to as Pax Americana. This period ushered in relative peace and stability across many parts of the world, significantly reducing risks associated with international trade and investment. However, recent developments, including shifts in U.S. policy under President Trump, such as discussions about annexing Greenland and altering relationships with key allies like Canada, have raised concerns about the strength of NATO and the broader alliance system. Meanwhile, rising regional powers are asserting their influence, creating additional complexities for global peace and security.
While some analysts speculate that China could step into the role traditionally held by the U.S., its focus has predominantly been on advancing its own trade and economic interests. Questions remain about China’s willingness to adopt a broader global leadership role, its commitment to free and fair trade, and the capability of its military to operate effectively on a global scale.
Impact on procurement: A diminishing U.S. commitment to the global security order could result in increased regional conflicts and trade disruptions, posing significant risks to supply chains across numerous industries. As geopolitical dynamics continue to shift, this scenario is becoming an increasingly realistic consideration for businesses and procurement professionals worldwide.
Tariff and other trade barriers
Historically, the United States has played a pivotal role as a key architect and supporter of the World Trade Organization (WTO), which aims to promote free trade and reduce trade barriers. However, under the Trump administration, there is a heightened possibility of the U.S. shifting its focus away from the WTO, favoring protectionist trade policies—such as retaliatory tariffs—to achieve national security and geopolitical objectives.
That said, the U.S. is not alone in this approach. In recent years, criticism of multilateral trade systems, like those championed by the WTO, has gained prominence in some nations. This has contributed to a broader global shift toward protectionist trade policies.
Impact on procurement: If major economies, including the U.S., continue to move away from multilateral trade agreements, the consequences for global trade could be significant. For procurement teams, this may result in:
- Higher costs: Tariffs and stricter customs processes could drive up the cost of goods and services sourced internationally. Procurement teams may face additional delays due to heightened scrutiny of goods’ origins, more complex documentation requirements, and increased duties.
- Limited global sourcing strategies: Shifting trade barriers may reduce the viability of global and low-cost sourcing strategies for certain products and services. Procurement teams could face constraints in identifying alternative suppliers and diversifying supply markets.
This evolving trade landscape will require procurement professionals to adopt more agile strategies to navigate these emerging challenges effectively.
Responsible sourcing and emissions
President Trump’s skepticism toward emissions reduction initiatives is well-documented, and it is likely that a future administration under his leadership would once again withdraw from the Paris Climate Accord. His focus on deregulation, while offering some benefits to businesses, could also reduce incentives for U.S. companies to prioritize social responsibility.
Additionally, some U.S. business groups have expressed concerns about the “extraterritorial impacts, compliance costs, and competitiveness” associated with the EU Corporate Sustainability Due Diligence Directive (EU CSDDD), which applies to non-EU companies meeting specific revenue thresholds. It is plausible that a Trump administration might align with these business lobbies, potentially supporting efforts to challenge or dilute the provisions of ESG-focused regulations rather than pressuring the EU for stricter enforcement.
Impact on procurement: Should the U.S. adopt a more lenient stance on corporate social responsibility and the EU subsequently weaken or exempt certain ESG regulations, it could reduce the urgency of responsible sourcing as a business priority. This shift could particularly affect areas such as labor rights and safety, supply chain emissions, and data privacy and security, posing challenges for procurement professionals striving to maintain high standards in these critical areas.
In conclusion, as the second term of the Trump administration begins, procurement and supply chain professionals must proactively implement robust mechanisms to continuously track, analyze, and respond to the evolving impacts of these policy changes. By staying ahead of the curve, they can effectively mitigate potential challenges, seize emerging opportunities, and ensure resilience and adaptability in an increasingly complex and uncertain global environment.