Effects of the Trade Policies and Tariffs on Global Supply Chain Networks

Globalization has transformed global supply chains (GSCs) to very interconnected webs where the companies in the global supply chain can ensure its maximum production, reduce costs and venture into the international markets. However the trade policies, particularly the tariffs and protectionist policies have recently upset such networks and have thrown new challenges to firms. The paper explains the impacts of tariffs in the context of global supply chain set ups, organizational strategy and economy efficiency. The study uses a qualitative methodology by using case studies of the Sino-US trade war, Brexit, and sanctions against Russia on top of the secondary data of industry reports and trade statistics, utilizing more than 60 academic sources, such as peer-reviewed journals, policy reports, and case studies. Based on the findings, tariffs raise the cost of production, disrupted logistics and made firms reorganize their supply chain by diversifying, nearshoring, and integrating technology. Those industries whose production is highly globalized (e.g. automotive and electronics) are the most susceptible whereas agriculture has been very resilient. The present research also indicates more general policy implication, i.e. the necessity of the balanced trade intervention, which must not endanger the stability of international supply channels at the cost of protecting local interests.