Trump's tariffs

Supply chain under siege

How the new geopolitical order is reshaping logistics and business strategies

15 May 2025

3' min read

In recent years, the organisation of the global supply chain is undergoing a more radical transformation than in previous decades. If globalisation had stimulated the construction of extremely extensive supply chains, optimised on cost and efficiency, the new geopolitical context - characterised by trade wars, protectionism, regional conflicts and pandemics - imposes a structural revision of traditional models. The lessons learnt in the management of the COVID 19 crisis, still fresh in the memory, and more recently the shock caused by the introduction of customs duties and trade barriers, desired by the US administration in a logic of 'decoupling' from rival economies such as China, are profoundly reshaping not only where companies produce, but how they think about the very resilience of their networks.

The demise of naive globalisation

For years, the dominant rationale was 'just-in-time' on a planetary scale: production relocated where labour cost less, efficient global transport, warehouses reduced to a minimum. But the imposition of sudden tariffs, the tightening of customs controls and the uncertainties linked to tensions such as those between the United States and China or Russia and Europe have made an underestimated risk evident: systemic vulnerability.

It is not just a question of delays or higher costs: entire supply chains can come to a sudden halt, undermining the very ability of companies to operate.

Towards 'Regionalisation' and 'Friendshoring'

In response, many companies are moving from a global to a regional or multi-local supply chain: production closer to consumer markets, suppliers distributed in politically 'friendly' areas (friendshoring). The aim is not only to avoid tariffs or trade disruptions, but also to provide more control and flexibility.

For example, strategic sectors such as semiconductors or batteries for electric cars are seeing a rush to reshoring (bringing production back home) or nearshoring (to neighbouring countries). The United States, with initiatives such as the CHIPS Act, seeks to rebuild domestic supply chains in critical sectors by breaking dependence on Asian suppliers.

The new supply chain governance: from cost to risk

A crucial change concerns the very concept of supply chain management. Where before the spasmodic search for the lowest cost dominated, the focus now shifts to risk management and resilience building.

This implies:

- Geographical diversification: avoid over-dependence on individual countries or suppliers.

- Controlled redundancy: maintain larger stocks or duplicate production facilities in different geographical areas.

- Technology investments: use of artificial intelligence and machine learning tools to predict disruptions and dynamically adapt the supply chain.

- Geopolitical compliance: analysing political and economic scenarios to anticipate regulatory risks or trade restrictions.

Never before has business been so influenced by geopolitical events as in recent years. In this scenario, Supply Chain Management almost becomes a discipline of applied geopolitics: it is no longer enough to know suppliers or delivery times, one has to interpret maps of alliances, international tensions and power dynamics.

The risk of "inefficient deglobalisation"

However, regionalisation is not a panacea. Building multiple and redundant supply chains increases costs, reduces efficiency and can slow down innovation. Moreover, competition for secure and 'friendly' suppliers risks creating new inequalities and economic instability.

The transition to a world of 'shorter' but also more rigid supply chains brings with it the danger of 'inefficient deglobalisation', where consumers pay more for less innovative products and companies face increasingly compressed margins.

From reactivity to strategy

Ultimately, supply chain management in the new geopolitical context can no longer be thought of solely in operational terms: it has become a strategic issue at the very heart of corporate competitiveness.

Companies that intelligently integrate resilience, diversification and geopolitical adaptability into their business models will be the ones able to thrive in a world that has now entered the era of the permanent geo-economy.

*Senior Executive Advisor - EY Business Consulting