Trump’s outrageous ’emergency’ executive order announcement of import tariffs on goods coming from Canada, Mexico and China – the USA’s three biggest trading partners – was not unexpected but still shocking, repulsive and disastrous. His reckless actions, to commence tomorrow, will cause price rises for American consumers, bottlenecks, disruption, red tape and inventory problems, not to mention the negative impact on business confidence and economic growth for the global economy.
Chris Clowes, executive director at global supply chain and logistics consultancy, SCALA, commented:
“The announcement of the US’s incoming trade tariffs on Canadian, Mexican, and Chinese goods, coupled with Trump’s ongoing rhetoric around trading with the EU, is bold. Waging a trade war with four of its biggest trading partners could have negative ramifications for the US. Nearshoring manufacturing to the US will be hard to justify for some companies, given the higher cost base and the expertise and sheer scale of operations that overseas manufacturing has previously provided. And with business challenges come consumer impacts. Rising costs would likely lead to cost-push inflation – meaning the consumer pays more for the goods and services they seek – and dampened purchasing power. For the rest of the world, however, we could see the likes of China, the EU, Canada, and Mexico form a trade alliance. We could also see potential trading opportunities for places like the UK open as countries look for new places to import.”
Chris Clowes, Scala
ASOS’s US Warehouse Decision
Clowes also commented on ASOS’s recent logistics problems:
“The decision by fashion giant ASOS to mothball a large US warehouse, resulting in a £190 million impairment charge, highlights the risks of undertaking large-scale supply chain transformations without iterative planning. Going forward, US customers will receive orders from its automated UK fulfilment centre in Barnsley and a smaller US site. This costly move reflects a substantial investment in long-term infrastructure, which unfortunately failed to align with slower-than-anticipated regional growth. This has been further impacted by fierce competition from the likes of fast-fashion retailers, Shein and Temu.
“The upsides of consolidating stock in the UK are that ASOS can significantly reduce duplicate inventory, lower space requirements, and streamline manufacturing for better inbound delivery. These changes not only reduce costs but also enable a broader range of products to be offered to US customers, potentially increasing sales. However, it will take time for these benefits to materialise due to the significant upfront costs. Moreover, moving fulfilment back to the UK may not lower logistics costs overall – especially as last-mile delivery often tends to be the most expensive element.
“At SCALA, we typically recommend taking a phased approach to this type of warehousing network shift, reducing risks while enabling businesses to adapt more effectively to market conditions. Undertaking centre-of-gravity studies to support strategic warehousing relocation beforehand can have big business benefits; for example, we’ve helped businesses identify savings of up to 30% in recent European projects.”
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