Trade tensions between the US and China sending stocks on another roller coaster ride this week.
Now, despite tariffs, geopolitical friction and talk of deglobalization, global supply chains, they're holding steady.
And according to DHL and NYUern's global connectedness tracker companies and countries are managing risks in a turbulent world and not pulling back from international business.
And this is mainly because of early imports as well as China's trade diversification.
Now, despite predictions of near shoring or regionalization, international trade distances have actually increased.
Well joining me this morning to weigh in is Karim Kafuri, president and CEO of the Atlas Network.
Good morning, Kareem.
Thank you so much for joining me today.
There has been a lot of back and forth between China as well as the US on tariffs, and as we count down to year end, what is realistic in terms of the role of trade diversification here?
Well, I think it's absolutely critical.
Trade diversification is going to be the way to manage and mitigate risk, um, for sure, end to end, many different kinds of product categories and industries need to be looked at as opportunities in the face of some levels of chaos based upon the turbulent nature of what's been going on in our economy.
You know, we have a lot of sort of fear and turbulence in the economy.
We saw this last week with the pullbacks in the markets based upon the shutdown, which is entering into day 16, as well as this announcement of the potential of 100% tariffs beginning here in November.
We also know that in mid November that the administration is, you know, having discussions with regards to the reciprocal tariffs on nations and whether or not it's justified and where that kind of ruling will will end up falling down with the Supreme Court.
So there's a lot really happening in the markets today, and we need to continue to kind of keep our eyes and ears on it as we enter into the holiday season and year-end, especially the 4th quarter here.
Yeah, and Karim, can you explain how companies are actually navigating the current landscape given this uncertainty we did get the Fed Sagebook yesterday which was able to offer some insight into the economy when it comes to consumer spending, as well as labor and inflation.
So with these input costs rising due to tariffs and higher service costs, what's heading for consumers as we head into your end and also the upcoming quarter?
Well, I think it's twofold.
We need to look at it from the business standpoint and from the consumer standpoint.
So businesses are looking at whether they're going to be over-ordering or doing some levels of stockpiling of their inventory to get ahead of these tariffs, while at the same time, consumers should be looking to really bargain shop wherever they can.
Um, you know, some businesses already did.
Overstock or basically stockpiled if you want to say in advance and so they may have over levels of inventory and in this case that could be a discount or a benefit to consumers.
We just don't really know the overall impacts because the supply chain moves slowly enough that the impacts aren't felt until months later, but we did see recently that Goldman Sachs had stated that up to 50% of the tariffs are going to be absorbed by consumers.
And so with the holidays coming upon us, you know, Thanksgiving and obviously the holiday season too, you know, we really need to take advantage of any kind of buying opportunities that we can as consumers knowing that these tariffs will be passed down as businesses just can't fully absorb them or sustain them in the United States.
Yeah, so building on what you just said, Karim, what does this mean for American companies, not just the multinationals, but also the smaller businesses that make up most of the American businesses.
Well, you know, I, I'm a big proponent.
I'm a supply chain optimist, as you know, and so in my mind and in my thought, you have to look for the opportunities even in the disruptions because in the end, the global supply chain is filled with all of those controllable and uncontrollable disruptions, and it's the uncontrollable ones that you really need to look out for by having some levels.
Risk mitigation.
So I'm a big proponent of cost engineering, looking at your existing products, your existing supply chains, seeing where you can make alterations to basically offset the increased tariffs and maybe be able to increase your profitability by using potentially a new material or a new distribution mechanism, looking at your actual value chain and the areas where you can be able to produce.
Other significant opportunities that will bring savings, discounts, potentially additional profits that you can then be able to continue to service your markets and even be able to create new markets.
So I do believe that small businesses need to do what they have always done very, very well, which is be nimble, be agile, and be able to kind of work through the peaks and valleys of any economic disruption, global supply chain included.
Yeah, and Karim, we have less than 60 seconds here as we are approaching the bell, but what are you hearing from stakeholders out there in terms of concerns regarding global trade?
Well, I think the issue here more than anything is how far this is going to kind of, you know, how far this is going to go, you know, there's there's a certain aspect of this which is negotiation and being able to create some levels of sanctions between nations, but when it becomes overly punitive and it has to be absorbed by the market, essentially, it's going to pass down to these consumers and so I think everyone is really looking for levels of resolution.
Most recently, you know, we saw that dissent had said, you know, we're going to figure out the terms and conditions with China.
You know, President Trump is saying that we're currently in the midst of a trade war, but the reality of it is, is that a war is all about how it resolves, you know, how do we come to the table, how do we communicate, how do we discuss it, discuss, so in the end we can have.
Sorry to interrupt you, but we will have to leave it there for today.
Thank you so much for joining us.
