Navigating the Potential Impact of a Re-election of Donald Trump on Procurement and Global Supply Chains

Amid an already turbulent political landscape, the dynamics of the 2024 U.S. presidential race were dramatically upended when President Biden stepped down in July, handing the Democratic ticket to Vice President Kamala Harris. This development may have introduced a host of new variables and briefly tempered fears of a Republican landslide, but for many international observers, the prospect of another four years under Donald Trump continues to be a source of apprehension.

With the outcome in the balance, it remains important to consider what a second Trump presidency could mean for supply chains and procurement strategies worldwide. This article looks closely at the complex scenarios this could bring for procurement and supply chains in 2024. By examining trade policies and strengthening risk management strategies, we will uncover the necessary approaches to not only endure the challenges but to become more decisive in uncertain times. Prepare yourself, as the future of global commerce is poised for transformation, and readiness is key.

Analysing Trends from Historical Data

Historical data offers valuable insights into potential trends for supply chains during election years. While the COVID-19 pandemic dominated 2020, the trade war initiated under the Trump administration between the US and China contributed to disruptions. Trump's election in 2016 heightened uncertainty in trade policies, leading some businesses to delay investments and increase inventory. Although the 2012 election didn't cause significant disruptions, economic factors like the eurozone crisis impacted supply chains. The 2008 financial crisis also affected global supply chains, though isolating election-related effects was challenging.

Looking ahead to the 2024 election, several key areas could influence supply chains and logistics: 

• Trade Policy: Democratic and Republican candidates hold distinct stances on agreements, tariffs, and foreign relations, impacting the cost and flow of goods imported and exported from the U.S. Trump's campaign has now proposed a new 10% tariff on nearly all foreign imports, a more aggressive approach compared to the past, and plans to strip China of its "most-favoured-nation" status, which could lead to even higher tariffs on Chinese goods.
• Infrastructure Upgrades: Bipartisan support for infrastructure improvements can directly affect transportation efficiency and logistics costs.
• Regulatory and Labour Law Changes: Shifts in regulations and labour laws can influence production costs and worker availability, potentially impacting overall supply chain efficiency.
• Talent Shortage: Talent remains a challenge, compounded by the potential impacts of immigration policies, particularly in warehouses.
• Consumer Confidence and Spending Patterns: Election outcomes and ensuing economic policies can sway consumer confidence and spending patterns, leading to temporary disruptions in specific sectors.

The Impact on Global Supply Chains & Procurement

A potential re-election of Donald Trump heralds the continuation of his administration's policies, including heightened trade tensions and tariffs. Such measures could disrupt global supply chains, especially for industries heavily reliant on international trade, such as automotive and medical technology. Here are a few potential areas that could see an effect:

• Trade Policies: Trump's "America First" agenda has focused on renegotiating trade deals and imposing tariffs on imports. The new proposal for a 10% tariff on all foreign imports represents an intensification of his previous policies. This could lead to significant disruptions for procurement strategies and increase the costs of imported goods, pressuring businesses to adopt more domestic sourcing solutions.
• Supply Chain Disruptions: Trump's administration has taken a tough stance on trade with countries like China, leading to trade tensions and disruptions in global supply chains. This approach may persist in his second term, leading to potential challenges for companies reliant on imports from affected countries.
• Government Spending: Trump's fiscal policy has included tax cuts and increased government spending, particularly in defence and infrastructure. This could result in increased procurement opportunities in these sectors, as well as potential changes in contracting procedures and regulations.
• Infrastructure Projects: Trump has emphasised significant investments in infrastructure. If these plans materialise in his second term, it could increase procurement activity in the construction and engineering sectors.

Trump's Trade Strategy with China

During his 2016 presidential campaign, Trump resonated a stark warning: "We can't continue to allow China to rape our country." He emphasised the erosion of America's manufacturing sector and the loss of jobs due to what he termed the "greatest theft in the history of the world" by China. Promising a fairer deal for American workers, Trump centred his approach to China around trade.

Trump aimed to compel China to substantially increase purchases of American products and institute structural changes to its state-led economic model. He believed this would eradicate America's trade deficit, bolster American manufacturing, and generate ample jobs for American workers.

In the early stages of his term, Trump laid out a four-part plan to secure Chinese trade concessions:

1. Declaring China a currency manipulator.
2. Addressing intellectual property and forced technology transfer issues.
3. Urging China to end export subsidies and enhance labour and environmental standards.
4. Lowering America's corporate tax rates to attract investment into the manufacturing sector.

Despite these efforts, when negotiations failed to produce the desired outcomes, Trump announced plans to impose tariffs on over $550 billion of Chinese products, prompting China to retaliate with tariffs on more than $185 billion of US goods. The ensuing trade war cost the US economy nearly 300,000 jobs and imposed a regressive tax primarily borne by American consumers. While Trump succeeded in reducing the bilateral trade deficit with China, America's overall trade deficit soared during his tenure, reaching a record high in 2020.

Despite these economic drawbacks, supporters credit Trump with altering the course of US-China economic relations, holding China accountable for its practices, and expanding the Republican Party's base. However, the impact on trade-exposed communities in the heartland indicates a willingness among Trump's supporters to endure economic setbacks in the fight against unfair Chinese economic practices.

Implications for Europe

A potential re-election of Trump in 2024 could significantly affect Europe's supply chain dynamics. During his previous presidency, Trump pursued an "America First" agenda with aggressive trade policies and protectionist measures. His administration imposed tariffs on various European goods and frequently criticised the European Union's trade practices. 

If Trump returns to office, he may escalate trade disputes with the EU, potentially leading to increased tariffs on European imports into the US. This could disrupt existing supply chains and strain economies on both sides of the Atlantic. Retaliatory measures from the EU could further exacerbate tensions and disrupt global trade flows.

Call for Action

Given the potential implications of a Trump re-election on procurement and global supply chains, organisations must update their procurement functions promptly. Here's a roadmap for action:

• Strategic Sourcing Revamp: A Trump re-election could trigger an urgent reassessment of sourcing strategies. Escalating tariffs and trade barriers between the US and China might demand a swift departure from conventional supply chain routes. Procurement teams must pivot, identifying alternative sourcing avenues and diversifying their supplier network to buffer against supply chain disruptions.
• Fortify Risk Management: In the face of uncertainty, robust risk management becomes paramount. Procurement functions must proactively scan the horizon for geopolitical risks and anticipate shifts in trade policies. This involves strategic scenario planning, crafting contingency measures, and nurturing resilient supplier relationships to weather unforeseen challenges.
• Embrace Technological Advancements: Harnessing the power of digital tools like data analytics, and artificial intelligence is imperative. These technologies can bolster supply chain visibility and resilience, offering a strategic edge in navigating turbulent waters.
• Forge Collaborative Partnerships: Strengthening alliances with suppliers, industry peers, and government bodies is key. Collaborative partnerships provide a shield against regulatory complexities and geopolitical uncertainties, fostering agility in response to evolving dynamics.
• Invest in Talent Development: Investing in the upskilling of procurement talent is non-negotiable. Equip teams with expertise in risk management, international trade regulations, and geopolitical analysis to navigate the intricate landscape with finesse. By proactively updating their procurement functions, organisations can bolster their resilience and adaptability, safeguarding their competitive edge in the global arena.

Conclusion

While the 2024 presidential election holds the potential to disrupt supply chains and logistics, predicting the precise impact remains elusive. Factors such as policy implementations, economic climates, and political cooperation will shape outcomes. 
While this article has focused primarily on the potential impact of Donald Trump’s return, it’s equally important to consider what a Kamala Harris presidency might look like. Many believe her approach would largely follow in the footsteps of Joe Biden’s policies, especially regarding trade and relations with China. Harris is likely to maintain a balanced, protectionist approach while continuing to strengthen alliances and uphold multilateral agreements.

However events unfold, businesses must remain vigilant, keeping abreast of candidates' platforms and policy shifts. Coupled with risk management solutions and advanced digital tools, this foresight equips supply chains to navigate uncertainty, stay agile, and emerge stronger, regardless of the election's outcome.