Tough love

US President Donald Trump’s tariffs or what he calls “tough love,” which he announced from the Rose Garden, are already creating waves of panic.

Stock markets have tumbled and in the US, widespread protests have erupted.

Over 50 countries want to start trade talks with the US over Trump’s tariffs, US officials say.

It’s quite surprising that we were slapped a 17 percent rate instead of the lower 10 percent tariff, given the Marcos administration’s supposedly friendly ties with the US.

Some sectors here are already sounding the alarm.

A group of farmers already warned that the higher tariffs will be harmful to the agricultural sector.

The Federation of Free Farmers, as reported by The STAR, said the government must not be complacent over the reciprocal tariffs even if the Philippines will be slapped with the second lowest rate among US trade partners.

The group also warned of a “potential” dumping of excess agricultural products by countries which were shut off from the US market due to the reciprocal tariffs, the report said. “Worse, even US agriculture players who were affected by retaliatory tariffs may look for alternative markets and could end up selling their excess supply to the Philippines at ‘very low prices.’”

FFF board chairman Leonardo Montemayor, a former agriculture secretary, said that in the end, it might be our own farmers who will bear the brunt of the Trump tariffs.

“The group identified the local coconut sector as one of the agricultural segments that may be immediately impacted by the US tariffs. The group said a slowdown in demand for coconut products, particularly coconut oil, from the US market can lead to a drop in domestic copra prices,” according to the report.

Economic council

Businessmen are on their toes as well.

The Management Association of the Philippines urged the government to form an Economic Security Council to study the impact of Trump’s tariffs by identifying opportunities and alternative markets that these developments will provide for our own economy and businesses.

The council, MAP said, can provide important scenario modeling analysis which will help the President and the executive branch in developing strategies and in negotiations with other governments in dealing with the new realities of international trade.

Beyond tariffs

Bain & Co., in a recent report, said it is imperative that companies reinvent their supply chains.

“Tariffs are accelerating businesses’ operations overhaul. Winning in today’s disrupted world demands bold trade-offs and strategic transformation,” Bain & Co. said.

Bain’s report highlighted the following major points:

• Tariffs are the latest disruption to a global supply chain system designed for a politico-economic context that no longer exists.

• Three-quarters of executives are juggling at least six competing supply chain priorities, according to Bain survey data.

• Supply chain redesign and optimization will require strategic trade-offs, and the right answer will vary by sector and by company.

• Leading companies start with their strategic goals, frame the operations equation as an integrated, multivariate system and upgrade talent and digital tools for the journey ahead.

According to a Bain survey of global operations executives in early January, companies, in anticipation of new tariffs, recently began reallocating capital to supply chain and technology investments, with debt repayments and dividends taking a backseat.

“Almost 40 percent of respondents anticipated double-digit percentage increases in product input costs due to tariffs, and about 80 percent said they were revising or considering revising financial forecasts because of tariff concerns,” Bain also said.

Against this backdrop, executive teams are diversifying their supply chain, expanding the supplier base, considering price increases and relocating manufacturing hubs.

Moving forward, Bain said, emerging leaders must also “recognize the supply chain must be managed as a complex, multivariate system, while understanding all the interdependencies. Decisions hinge on strategic trade-offs unique to each company’s long-term goals. Certain structural designs will make the trade-offs more manageable.”

Bain said leaders must also constantly upgrade and train operations teams to be more strategic, as well as more innovative, in their use of digital tools. They must have the data necessary to make strategic choices.

In all, Bain said companies must thrive and not just survive.

“The old supply chain playbook is obsolete. Companies that treat tariffs and other disruptions as isolated crises to ‘manage through’ will find themselves in a constant state of reaction – always behind, always vulnerable.

“The leaders pulling ahead are the ones using this moment as a catalyst for reinvention. They’re transforming while making bold trade-offs that position them not just to survive the next disruption, but to thrive in a future where resilience, sustainability, agility and visibility will define success. The question isn’t whether your supply chain needs to change – it’s whether you’re willing to rethink it from scratch.”

It’s a new world order, for sure, and companies must navigate it well to survive and thrive.

As for our government, the least it can do is not to downplay the impact of this looming trade war and, if needed, provide the necessary support to our local industries.

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Email: eyesgonzales@gmail.com. Follow her on X @eyesgonzales. Column archives at EyesWideOpen on FB.