A further round of tariffs on global trade will be impacting companies sourcing aluminium and steel from next month. In reaction to the latest US tariff news the European Union threatened retaliation against US President Donald Trump’s planned tariffs on all steel and aluminium imports, potentially reviving a transatlantic and wider global sourcing and trade war unless partners in the world’s deepest trading and investment relationship can broker a deal over the next month.
Global Sourcing Strategies: How the EU Responds to US Trade Tariffs
In a speech to parliament on Tuesday, German Chancellor Olaf Scholz said if the US “leaves us no other choice, then the European Union will react to this as one. As the largest market in the world with 450 million citizens, we have the strength to do so.”
European Commission President Ursula von der Leyen said in a statement that “unjustified tariffs on the EU will not go unanswered — they will trigger firm and proportionate countermeasures.”
The Trump administration set March 12 as the date the new 25% tariffs will take effect. Tuesday’s quick reaction from Washington’s allies in Europe was largely expected.
The American Chamber of Commerce to the EU aimed its criticism at the heart of Trump’s justification for higher border taxes on steel and aluminium.
“The EU is not a national security threat to the US,” according to a statement from the Brussels-based organization that represents US companies. “Rather, it is America’s most important economic partner” and “should be permanently exempt from the tariffs.”
Trump followed up his announcements on steel and aluminium with a further round of reciprocal tariffs on any country that levied US goods in response.
Global Sourcing Strategies to Protect from Offshore Tariffs
As the global sourcing and procurement environment becomes more unstable and protectionist policies are traded between nations how should companies respond to protect themselves from margin decline and tariff impacts.
Global Sourcing Strategies for Long-term Tariff Avoidance
ET2C International are a British owned global sourcing company with over 23 years experience. Delivering and executing strategic sourcing plans, new sourcing market research, running risk free dedicated buying office teams for our international clients. Our 200 colleagues are based in 7 offices in global sourcing emerging and developed markets to ensure you deep insight and access to manufacturers. Making sourcing simple.
- Rapidly building margin
- Managing and reducing corporate risk
- Quality & Compliance management
Long term tariff impact avoidance in global sourcing
Long term global sourcing and procurement planning for 2025 appears to be characterised by rolling series of tariff and protectionist shocks to the system. Companies looking to build margin defence plans or develop their competitive advantage need to develop a more nuanced approach than the previous
- Near or Friendly shoring of production. As the definition of friendly shores is becoming more complex.
- Moving capacity from China to Asia countries such as Vietnam, Cambodia to Thailand as all countries could be liable to swept up in further tariffs (outside of those running a big US trade surplus)
Roadmap:Global sourcing strategies to mitigate tariff impacts
The creation, application and exemption planning around US tariffs appears to rapid in announcement and changeable in application making long term planning much more challenging for companies who are sourcing products globally. As a reaction to this dynamic situation sourcing and procurement planners should approach the challenge with a multi-channel approach to balance risk and allow some degree of agility.
Whilst for some companies bringing manufacturing inhouse may be a viable solution, for the vast majority offshore supply of products or components cannot be replaced without huge cost inflation. A multi-channel approach to margin defence and risk mitigation in global sourcing could be built from a range of projects:
Strategic sourcing partners
Deepening relationships with existing partners in the face of tariff application uncertainty. Working with current suppliers to create a deeper partnership for growth can mitigate risk for both vendor and client. Ensuring a partnership base on mutual forward planning and not simply an order and response.
Buying office team in new sourcing markets
Establish dedicated buying teams in several new markets from Turkey to India to build wider supply network. A dedicated buying team on the ground in sourcing markets can rapidly build margin, mitigate risk and manage quality and compliance. Improving procurement performance of each market
New Sourcing markets:
Rapidly explore the opportunity new sourcing markets can offer a global sourcing markets can bring rapid improvements in global sourcing and procurement performance. India and Turkey have been seen as safe havens from the impact of tariffs announced so far.
Executing a global sourcing strategy
As more tariffs and protectionist measures make business planning more challenging, building a clear focused sourcing strategic plan will be vital to manage business through these hugely challenging times. To learn more about how ET2C International have worked with many global companies to create and deliver strategic sourcing plans that build margin, reduce risk and delivery simplicity contact@et2cint.com
