This week’s supply chain risk news
Potential risks loom over the Taiwan Strait
Relations across the Taiwan Strait are increasingly strained amid prospects of economic turmoil—or a potential military escalation.
In June, Taiwan added several Chinese companies to its export control list, including manufacturers of semiconductors and telecommunications equipment. China retaliated with export controls of its own, targeting dual use products like bulletproof vests.
Further complicating matters, Taiwan’s president has been vocal about Taiwanese sovereignty in recent months—even as China’s military has conducted exercises in the 180-kilometer-wide Taiwan Strait, with aerial incursions occurring almost daily.
This could point toward a few possible scenarios, as we discuss in our Risk Center [[link forthcoming ]]. If tensions worsen, Beijing could impose sanctions, though it might exempt semiconductor products. These make up 40 percent of Taiwan’s exports, and on which China relies, just like seemingly everyone else
More extreme circumstances are possible, like a partial quarantine of ships to and from the island, perhaps as a Chinese test that stops short of the complications of a full-on blockade. The potential ripple effects could reach into the trillions of dollars, with semiconductor-dependent sectors like tech and automotive manufacturing facing delays and surging prices.
As steep tariffs take hold in India, another round of trade talks is cancelled
A 50 percent U.S. tariff on Indian products is now in effect, “threatening a steep blow to India’s overseas trade in its largest export market,” per NPR, and risking “inflicting significant damage on the Indian economy and further disrupting global supply chains,” per the Guardian.
Indian officials estimate the move will affect more than $48 billion worth of exports. Furthermore, some shipments may no longer be commercially viable. Textiles, jewelry, leather, food, and cars may be particularly hard-hit, although for now, the U.S. has exempted pharmaceuticals.
Might this just be a bump along the road to a grand bilateral deal? To date, there have been five rounds of negotiations. However, New Delhi‘s sticking point is dairy and agricultural imports. Such an arrangement could undercut millions of Indian jobs by importing cheaper products from the U.S.
With Prime Minister Narendra Modi vowing not to budge, a sixth round of trade talks was cancelled.
Tariff woes are mounting for auto parts suppliers in Europe and Asia
The Trump administration’s sizable tariffs on automobiles and parts are hitting countries known for their car industries, like Germany, Japan, and South Korea. Major car companies like Toyota depend on vast networks of parts suppliers. The added costs could wreck suppliers, the New York Times reports, as the U.S. is the biggest buyer of vehicles from those countries.
“Unlike some carmakers, suppliers often operate on razor-thin profit margins and don’t have the money to invest in shifting production to other countries. The tariffs are also just the latest problem for companies contending with a shift to electric vehicles that could make many of the parts they produce for combustion engine vehicles obsolete,” per the Times.
Japanese auto parts shipped to the U.S. have ticked down by value and volume each month since May. Last month, that value was down 17.4 percent compared to a year earlier. Meanwhile in Germany, officials say tariffs have already cost the auto industry billions.
For now, a partial reprieve applies to parts for carmakers that finish assembly in the U.S., but that’s expected to expire in 2027.
Whether it’s a dresser, a vanity, or just a chest of drawers, it might soon be tariffed
President Donald Trump says officials are now investigating furniture imports, which by October will “be Tariffed at a Rate yet to be determined.” The announcement targeting furniture, which came via Truth Social, follows a move to apply tariffs on steel and aluminum to appliances like refrigerators, ovens, and washing machines.
While a similar investigation in March looked at lumber and other wood products, the result, if any, has been so far unclear. Last year, the U.S. imported almost $28 billion worth of furniture, Supply Chain Dive reports; much of it came from Vietnam, China, Malaysia, Canada, Taiwan, Italy, and Mexico.
It’s also not certain how much new tariffs can accomplish to shift furniture production to the U.S., one skeptical supply chain professor notes, because another tariff tweak could undermine such a newcomer’s whole business. “However, such a policy will further hurt furniture wholesalers and retailers and serve as a further headwind for container shipping volumes,” he wrote.
The warning signs are often there. Can you put them to use?
Businesses rely on a steady flow of goods, and when a surprise disruption crimps that flow, it can leave teams waiting for shipments, and cost time and money. But while logistics disruptions might sound hard to predict, they tend to fall into predictable patterns. Knowing this can inform how you mitigate risk and what potential disruptions you plan around.
Hurricanes are one example. Meteorologists track them before landfall. Contextualizing this information for your logistics operations can help you understand the potential impacts for your locations and shipping lanes.
Similar patterns hold for port disruptions; it helps to know about seasonal shipping volumes and closures in the area. For labor disputes, watching contract negotiations and key deadlines can tell you what’s likely. Even supplier and carrier insolvencies come with warning signs if you know where to look.
Also predictable are the consequences after an event, like delayed shipments and higher prices. And when you can predict such risks, you can be ready to act decisively—and thus save serious cash, as we discuss on our blog.