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Are Supply Chain Sustainability Efforts Affected By Tariffs?

Are Supply Chain Sustainability Efforts Affected By Tariffs?

Tariffs affect both imports and exports, therefore a supply chain technology platform that can handle several sorts of flows is critical, especially for sustainability projects. This means that you must be aware of how strong and resilient your supply chain strategy really is, while also trying to ensure enhancements every now and then. 

Multinational firms benefit from end-to-end functionality such as supply chain visibility, real-time predictive analysis, programmable planning, logistic support, and reverse flow handling through the Multi-Party Orchestration platform, which allows organizations to better meet their sustainability management goals, future-proof, and increase resilience. Businesses like MPO can help you in taking the right initiatives for supply chain technology.

The Global Steel-Manufacturing Industry:

To understand how tariffs are affecting supply chain sustainability, let’s take the global steel-manufacturing industry as an example.

Carbon dioxide emissions from steel manufacturing are influenced by a number of factors, including capacity utilization, facility design and care, the energy grid, and environmental legislation. Secondary steel production (which accounts for around 70% of the steel produced in the United States) emits much less CO2 than primary steel production. Therefore, the United States is incentivizing other countries to employ a secondary steel production approach instead of the previous one.

While such actions are encouraging in terms of encouraging more sustainable behaviors, they also highlight how volatile the market and the rules of the game can be. Short-term incentives are beneficial, but establishing resilience and boosting sustainability efforts will necessitate financing in supply chain technology that allows dynamic partnering, smarter command and freight management, and improved analytics to shift and adapt to the ever-evolving field regularly, and effectively.

Finances For The International Steel-Making Industry’s Supply Chain Sustainability:

The Biden government evaluated a 25% tariff on all imported steel and a 15% tariff on all imported aluminum introduced in 2018 in order to increase America’s supply chain resilience. They revealed their plan to lower tariffs with EU allies in November: Steel and aluminum produced in the EU utilizing low-carbon secondary manufacturing technologies will be duty-free up to a certain limit under the new transatlantic deal.

Hopefully, this strategy will encourage environmental stewardship and reduce global greenhouse gas emissions. According to Global Efficiency Intelligence, LLC, the global steelmaking business accounts for around 11% of global carbon dioxide emissions, therefore improvements in this sector would help to combat global climate change significantly.

supply chain sustainability

In terms of economic consequences, the tariffs imposed in 2018 triggered a tit-for-tat transatlantic trade war, with some nations imposing counter-tariffs on US products (including motorcycles, jeans, wine, and peanut butter). Tariffs on US exports were recently lifted. In 2022, businesses and consumers who use steel and aluminum may witness price decreases. Material availability may improve as businesses seek out new suppliers as a result of increased commerce, and supply chain bottlenecks may be reduced.

How To Enhance Supply Chain Resilience?

Manufacturers will need to monitor, analyze, and report GHG emissions once global trade finally opens. This plan to cut GHG emissions could signal the start of a new trend in global commerce, one that prioritizes long-term financial and environmental advantages over short-term profit. A  supply chain software and operational platform that can incorporate those requirements and seamlessly calculate, track, and continually monitor GHG emissions across the whole supply chain to fulfill all rules is the greatest requirement for all companies.

Steel and aluminum production isn’t the only sector that will be impacted by increasing regulation as the need for sustainability grows critical. Companies should seek reliable technological methods that are future-proof and capable of helping minimize risk, and support sustainability initiatives under ever-changing conditions to truly establish supply chain resilience and maintain it amid regular volatility.

For example, Multi-enterprise supply chain business network technology provides end-to-end control and visibility and enables teams to govern inbound, outgoing, and reverse flows, as well as in-transit stock control and ordering. Platforms with adjustable planning and logistics capabilities may also help businesses become more environmentally conscious by extending the life cycle of their products by allowing for repair, replacement, and recycling flow management. Networks can improve supply chain visibility and robustness while simultaneously implementing cleaner environmental practices by integrating business rules and automation.

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