The So What from BCG Navigating the New World of Tariffs and Trade
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May 7, 2025 Marc Gilbert, the global lead of BCG's Centre for Geopolitics, and Michael McAdoo, BHI Fellow and founding member of BCG’s Geopolitics and Trade Practice, dive into the unpredictable world of tariffs and trade. They discuss how companies can enhance supply chain flexibility and embrace scenario planning in the face of shifting geopolitical landscapes. The conversation highlights the importance of supplier diversity and strategic agility to navigate current trade dynamics, particularly in the context of U.S.-China relations.
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New Era of Global Trade
- Global trade is entering a new phase characterized by increased tariffs, regional trading blocs, and supply chain redefinition.
- This will impact nearly all sectors and enterprises worldwide.
Unprecedented Tariff Volatility
- Current tariff volatility is unprecedented, with rapid changes in tariff status sometimes within hours.
- The current tariff levels are comparable to those during the 1930s Smoot-Hawley tariffs that worsened the Great Depression.
Tariff Impact and Supply Chain Strategy
- Tariffs impact all sectors distinctly, benefitting companies with domestic footprints while disadvantaging importers.
- Companies balance building resilient supply chains via multiple suppliers and geographic sources with cost productivity through technology like AI.