By: Michael D. Easton, President, General Manager

Navigate Uncertainty in Global Trade 

As I reflect on the growing uncertainty in global trade driven by geopolitical shifts – forces like economic sanctions, trade wars, and supply chain disruptions – I recognize how profoundly these factors affect businesses across various industries.  

I believe these disruptions will demand that companies reassess their trade strategies, creating challenges that ripple through every business sector. For this reason, resilient supply chains are a necessity. This awareness drove me to consider key factors that can guide businesses in adapting supply chains to navigate the global trade landscape more effectively. To that end, I thought I’d share some of my thoughts on the driving forces of uncertainty, how to turn them into opportunities, and resources for the road ahead. 

The Geopolitical Landscape: Three Sources of Uncertainty 

I believe “uncertainty” can be synonymous with “opportunity” when understood and approached strategically. The best path toward opportunity is to pay attention, evaluate the facts and circumstances, and be prepared to make informed changes.  

While by no means exhaustive, these are some of the main sources of uncertainty that can lead to opportunity when the geopolitical landscape shifts.  

1. Economic and Political Tensions

Trade conflicts, regional instabilities, and economic sanctions always have the potential to disrupt global supply chains. A recent example is the 3+ years of semiconductor chip shortages. Though the onset of the COVID-19 pandemic may have triggered the shortage, it was heavily intensified by US trade restrictions with China, including the predecessor Section 301 Tariffs and the myriad Antidumping and Countervailing Duty Scope Orders.  

In addition to US-China relations, there is renewed tension between US-Mexico and US-Canada, mostly instigated by the incoming US administration. Notable geopolitical shakeups include:  

• In January 2025, on the heels of the resignation of Finance Minister Chrystia Freeland, Justin Trudeau announced he would step down as Canadian Prime Minister 
• Mexico elected its first female president, Claudia Pardo, in October 2024 
• In November 2024, the US re-elected Donald Trump and everything that signifies the U.S. position on international relations 
• USMCA is slated for renewal in 2026 

Mexico and Canada have been in the top 3 trading partners of the U.S. since the 1970s, and China for over two decades. It’s never been more important than right now to evaluate and understand these economic and political events through the eyes of trade. In my experience, the prepared business succeeds where the unprepared fail.  

2. Environmental Regulations and Trade Policies

Climate policies and tariffs also continue to reshape sourcing and logistics strategies. For example, the Carbon Border Adjustment Mechanism (CBAM) is the EU's tool to, “put a fair price on the carbon emitted during the production of carbon intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries. [1]”  

It’s being phased into action throughout 2025 before the rules fully take effect in 2026 – which means right now, U.S. businesses need to take time for:  

• Understanding how the new requirements impact their business and/or their customers 
• Planning and communicating with partners to meet the new requirements 
• Implementing systems within their operations to normalize new responsibilities 

Mexico’s updated Complemento Carta Porte (CCP, or “Carta Porte”) documentation requirement involves heightened regulations and more severe enforcement to reduce tax evasion and enhance supply chain transparency. 

New international trade agreements (some of which don’t include the U.S.) are being signed and incorporate more protections for labor pricing, intellectual property, environmental protections, and more. There’s also growing pressure on industries to reduce their environmental impacts and carbon footprints from consumers (as opposed to governments), and businesses are expected to pay attention. 

At Star USA, we guide organizations in navigating the requirements, communicating and translating the regulations, developing internal and external strategies, and understanding the most impactful aspects of new regulations and trade policies.  

3. Technological Shifts

Technological advancement and automation continue to reshape global trade dynamics; innovations in AI, robotics, aerospace, and other cutting-edge industries get a lot of buzz – and justifiably so.  

One of the interesting aspects to consider is that advancements commonly found in the West today—things we take for granted, like the internet, advanced communication, and automation—are now reaching parts of the world that previously lacked access. Regions in Southeast Asia, continental Africa, South America, and the Middle East are emerging as new players in international markets, presenting new challenges & opportunities for U.S. businesses.  

The question, considering everything above, is “what can be done today that will help prepare for tomorrow?” 

Key Considerations for Adapting & Diversifying Supply Chains 

Now that we have identified some uncertainty vectors, we can discuss top considerations for strengthening your supply chains.  

1. Regional Diversification

Sourcing from multiple regions can mitigate regional risks; a common example is near-shoring and friend-shoring as responses to geopolitical pressures. 

Here’s a real example from a Star USA client that I believe highlights a challenge and solution. Due to the evolving trade policies between the US and CN, particularly pending rule changes associated with Section 301, Star was asked to evaluate the impact on an automobile manufacturer's multi-stage, multi-national manufacturing process. Increases in tariffs on certain parts, subassemblies, and semi-finished goods would devastate domestic sales.  

We investigated the proposed rule changes, applied those rules to the various manufacturing processes happening domestically and abroad, and identified a series of changes that would allow the automobile manufacturer to avoid facing the full brunt of the changes. Instead of a 25-50% increase in spending, they could take advantage of changing some suppliers, direct shipping parts to other regions for further manufacture, and then importing a different stage of manufactured articles into the U.S.  

This is known as tariff engineering, a legal way to avoid paying certain tariffs if you can take advantage of global partners. While we could not avoid paying all duty, we significantly reduced the combined impact to under 15%. Avoiding those costs will pay off for as long as the Section 301 rules remain in effect, providing an ongoing competitive advantage against similar manufacturers unable to make the same adjustments.  

2. Supplier Network Resilience

I always encourage businesses to evaluate their supplier reliability and establish backup options for critical inputs. When working these challenges, we dial in on the key strategies that create the most significant short-term impact while laying the groundwork for long-term evolutions. Our Supplier Engagement services almost always focus on 3 layers: 

1. Supply Chain Channels 
2. Regulatory & Operational Impacts 
3. Strategic Partner Relationships 

The best way to evaluate supplier networks is by addressing all three of the points above; each one dovetails with the other and it’s all about understanding those connections to find the best strategy for the circumstances. If there was a 1-size-fits-all approach, it would already be solved – it requires a combination of effort, understanding, and maintenance to synchronize an approach.