Originally published in Industry Today
By Lou Longo
A China-based manufacturing firm I know had decided earlier this year to shift production to Mexico as a way of sidestepping the worsening U.S.-China trade war. Then the White House announced that the United States would impose tariffs of up to 25 percent on all Mexican imports if the country didn’t crack down on illegal immigration.
Even though those tariffs didn’t go forward, the threat was enough to make the company tear up its plans and start looking for alternatives.
This is how companies are being whip-sawed on an almost daily basis in the new era of global trade unpredictability and disruption. Just as businesses start to feel a hint of stability returning, another bout of tough rhetoric, a currency swing, or new protectionist measure throws their plans into uncertainty.
This is creating an environment where the usual reliance on past precedent as a guide to the future has become derailed. In an instant, all the assumptions about the buying price for raw materials, the future sales price and future demand can be turned on their head.
Read the full article at Industry Today
Lou Longo, CPA is the International Consulting Practice Leader at Plante Moran.