Tariff oriented Supply Chain Management: Implications of trade agreements on strategic decisions

Global trade of finished goods as well as global sourcing of components and raw material is gaining importance. The paper aims to investigate the impact of trade agreements and tariffs on global Supply Chains and to describe the implications for strategic supply chain management decisions in terms of supplier selection and plant locations. The present system of trade agreements and tariffs among single countries and economic areas is introduced, followed by a qualitative and quantitative assessment of their impact on a global Supply Chain. Furthermore, the authors illustrate how trade agreements can be used to reduce tariff costs and which implications for the Supply Chain structure arises. Moreover, the authors highlight potential risks and problems of a tariff oriented Supply Chain Design. The paper concludes with three scenarios that demonstrate the variability of Local Content calculations.