Global Trade: The Certainty of Uncertainty

During times of economic growth and prosperity, global trade impacts the supply chain and how you match demand to supply. But what is the impact on the practice of supply chain management in today’s uncertain world?

One thing is certain: Many government policies are disruptive to global supply chains and to the businesses and consumers depending on them.

If you want a poster child for what over-regulation can do to an economy, consider Brazil. The biggest economic contraction in 25 years is pushing the country into its worst recession in the past 100 years. Yes, issues other than over-regulation are at play, but who thinks the chokehold on commerce is helping?

Jeffrey Immelt, the CEO of General Electric and President Obama’s jobs czar, said that candidates cannot get elected unless they maintain the status quo, and fight the progress that helps businesses grow and encourages global trade. "As a result, most government policy is anti-growth," he said. "In the United States, we want exports, but seem to hate trade and exporters; globally, governments love small businesses, but then regulate them to death."

Regulations in the United States ballooned during the past seven years, and 3,000 more are pending, claims the U.S. Chamber of Commerce. Is over-regulation a key driver for moving operations offshore? If you listen to business leaders like Immelt, the answer is yes. Add in high taxation compared to the rest of the globe, and you have one more reason corporations move—tax inversions. Then consider currency manipulation for domestic political reasons. All this creates a perfect storm for continuing global trade uncertainty—the kind that drives constant supply chain evolution, or, in some cases, devolution.

All this uncertainty requires constant supply chain change. When you chose a career in logistics, did you expect to be involved in dealing with offshoring, reshoring, nearshoring, finding more compliant or politically acceptable vendors, and working around the global chaos created by bad government policies? And, as if you don’t have enough responsibility, business leaders who want to smooth the edges of uncertainty often turn to you to efficiently match supply to demand. By staying abreast of these issues, and broadening your purview beyond supply chain management, you can have a real effect on how your company navigates the global economy in an uncertain world.