Senior professionals holding managerial procurement jobs and supply chain jobs in the construction, consumer appliances, and automotive industries are being advised to re-evaluate their sourcing, procurement, and manufacturing strategies without delay amidst continuing uncertainties around US aluminum and steel tariffs.
The call comes after President Trump and European leaders negotiated a resolution over these tariffs but left many issues unclear. Evidence is mounting that this lack of clarity is already disrupting manufacturing supply chains in the USA.
The Corporate Performance Improvement Group at global professional services firm Alvarez & Marsal (A&M) is recommending immediate steps to mitigate risk in the supply chain – additional but urgent work for procurement professionals which may require the temporary assistance of supply chain interims.
Whereas the shorter-term tariffs on these commodities, imposed by previous Presidents (notably George W. Bush and Barack Obama), enabled affected companies to reduce costs by moving production to lower-wage emerging economies, A&M’s Senior Director Matt Stanfield believes this may not be a viable option today. President Trump’s tariffs are more sweeping, and these same companies now must weigh up where they will encounter greater exposure to risk from retaliation-tariffs.
Stanfield said: “No one expected trade conflicts to emerge with countries in the EU because of long and traditional relationships formed over a number of years.” He then went on to say that the threat of renovating duty structures on cars, as an example, upsets that entire legacy.
A&M identifies major players in the construction and building industries as especially vulnerable to heightened risk, as is the automotive sector. Manufacturers of consumer appliances such as Hitachi, Electrolux and Whirlpool have already warned shareholders of potential problems ahead.
The professional services giant is now urging procurement and supply chain professionals in the affected industries to review ongoing contracts and supplier engagement beyond existing 12-month deals, and devise “what if” models to manage additional possible trade compliance obstacles.
Stanfield concludes, “Manufacturers in all these sectors should be asking themselves ‘what are my alternatives?”