With the imposition of trade tariffs by the US government last month, procurement professionals are being hit with a contingency that no one could have overseen.
With retaliatory measures already emanating from China, economic pain is on its way for meat production, steel and 126 other US products, amounting to $3 billion of exports.
That’s a sizable hit.
But in an escalating war of words and tariffs, the US has responded with subsequent measures to be imposed specifically on Chinese products, implicating $50 billion worth of the country’s exports.
With the world now on the brink of a trade war between two of its most powerful nations, lobbyists all over the USA are propelling themselves toward Washington, DC at warp speed, hoping to derail a policy which has provoked these conditions. But backchanneling between the two nations is also underway, according to US Treasury Secretary, Steve Mnuchin.
Caught in the crossfire are global supply chains.
We all lose
In this display of international muscle-flexing, it’s hoped that the quiet diplomacy mentioned in the media by Secretary Mnuchin will temper the worst excesses of both sides. But what if that’s not the case? What if we’re plunged into a global trade war? What if the next move on the part of the US government is to restrict Chinese investment?
That would cost supply chains a great deal. When investment dollars cease to flow, manufacturing concerns are forced to move operations like distribution centers and even factories, representing a major supply chain disruption.
China’s investment plans include promoting its technology sector, something the USA is attempting to disrupt. This further exacerbates tensions between the two countries, as growth in this sector is crucial to Chinese economic growth.
There is even the threat of the US pulling out of the World Trade Organization, which would mean further de-stabilization, should neither nation blink.
Protect yourself with a GPO
Unforeseen contingencies are a supply chain’s worst nightmare. So how do companies like yours protect yourself from the contingency represented by an escalating trade war between two intransigent powers?
A Group Purchasing Organization is the solution. Regardless of what happens next with tariffs and the looming threat of inhibiting the ability of the Chinese to invest in the USA, a GPO offers its members pricing stability which will see them through the worst potential damage of all possible scenarios.
Because a GPO offers sustainable savings, protecting your company from unforeseen price increases for the long term, members are spared from the impact of tariffs and the fallout which is inevitable when investment is inhibited.
CenterPoint is a trusted procurement advisor leveraging $850 of collective, indirect spend. As a GPO, we’re able to return material savings to our members, as their funds form the basis for them to act collectively, receiving best in class terms and conditions and pricing stability.
We’re living in uncertain economic times, with tensions rising between the USA and China. Protect your company with the power of numbers. Contact us.