Supply Chains Get (Remain?) Political A

The Trump era ushered in a sober reminder to the world (primarily China and the EU) that mercantilism and one-sided trade policy will eventually have to face the music in the face of a sleeping giant who awakens (finally) to a new trade era.

And now the world is responding, and supply Chains are getting extremely political.

The Prophet has five big predictions here … and most are on the money (as you can probably deduce given that the doctor has given the prediction an A).

1) All major US Presidential candidates and parties march in unison on trade. And you won’t hear a peep about it — since they’re all too busy trying to rip each other apart for sinful ideas and acts, including many they didn’t even do. (But this is not a political site, so you can do your own research here.)

2) The US deepens ties with those regions (trade-wise) which are necessary to eventually operate supply chains independently of China. This could actually be 1b) as it’s a fallout from flawed trade policy and practices of the past two decades.

3a) Technology transfer, favorable trade terms and investment deals become the price Israel pays to “finish the job”.

Nope. Since Hamas achieved it’s goal of triggering other militant and terror groups to both attack trade ships and increase their (terror group) resentment, and hate, of the US, Israel doesn’t need to do anything to “finish the job” — they will get what they need regardless of what Congress or the Senate wants throughout this year as Biden actually said “Israel could get into a fistfight with this country and we’d still defend” it — so now that US trade is being actively attacked, Biden will make sure the US is there doing whatever is needed pro-bono (including bombing Yemen and [future] Israeli targets on behalf of Israel).

3b) Saudi and the UAE quietly deepen ties with Israel to create a broader trading block powerhouse in the Middle East (outside of the headlines, at least for now).

The Prophet hit the bullseye here. Saudi and the UAE are going to work with Israel to create the trading block powerhouse in the backroom to become the preferred trading block of the US and UK in the middle east (as Iran is pushed out due to their [perceived] lack of willingness to help contain the Houthis and other Islamist terrorist groups).

4) China continues its mercantilist march to fight for the natural resources it needs (to import) around the world as its trade imbalance declines. (Note that, in 2022, China Imports to the US were 563B and its total trade surplus was 877 B US dollars, vs 230 B US in 2012. If it lost half of US exports, it would lose 33% of it’s trade surplus and if the EU followed suit, who imports 626 B Euros, it would be down 72% of its trade surplus, and be back to 2012 trade surplus level.)

5) The EU becomes increasingly irrelevant … as a trading block and single economic group as backlash to central policies, country policies, and failed energy policy distract from collaboration.

The backlash to Brussels is becoming quite significant, especially in Poland and neighbouring countries where Ukranian grain and is being dumped and the removal of restrictions mean that the local truckers are losing their jobs (at a time when most of the world doesn’t have enough truckers). There’s the massive protests in Germany due to subsidy cuts for diesel and vehicle taxes for farm equipment. There’s also discontent in the Nordics with the number of Islamic migrants/refugees being let in without verification (which is allowing the terrorists to exploit the system and slip into the EU — as evidenced by the 2022 Oslo shooting). Etc. As a result, trading turmoil is going to increase significantly, even as the EU bands together in spirit (if not in action) on climate change.

You need to identify where the political winds are shifting, or doubling down, and start working on compliant (re)sourcing strategies now before your current source gets cut off, triple tariffed, or unusable due to extended, and still unreliable, delivery times.