TY - JOUR
T1 - The effects of tariff increases on supply base complexity
T2 - A conceptual framework
AU - Chae, Sangho
AU - Mena, Carlos
AU - Polyviou, Mikaella
AU - Rogers, Zachary S.
AU - Wiedmer, Robert
N1 - Publisher Copyright:
© 2019 Elsevier Ltd
PY - 2019/10
Y1 - 2019/10
N2 - Recent protectionist trends around the world have raised interest in newly enforced or increased tariffs and their effects on global supply chains. For firms sourcing globally, tariff introductions or increases significantly affect importing costs, which ultimately affect product costs. Such tariff changes may incentivize firms to adjust their supply base to mitigate these cost increases, thus altering the structure and complexity of firms' supply bases. In this paper, we first characterize the U.S. tariff landscape from 1997 to 2017. We then develop a conceptual model to explain how the severity and timing uncertainty of expected tariff increases influence a firm's speed of adapting to the changing tariff environment. Specifically, we explore firms' propensity to form or delete ties to suppliers, which influences supply base complexity. Moreover, we consider factors that moderate the relationship between severity, timing uncertainty, and supply base complexity, including a tariff's geographical scope, a firm's relative purchase spend, and supply risk. Our conceptual model offers both research and managerial implications.
AB - Recent protectionist trends around the world have raised interest in newly enforced or increased tariffs and their effects on global supply chains. For firms sourcing globally, tariff introductions or increases significantly affect importing costs, which ultimately affect product costs. Such tariff changes may incentivize firms to adjust their supply base to mitigate these cost increases, thus altering the structure and complexity of firms' supply bases. In this paper, we first characterize the U.S. tariff landscape from 1997 to 2017. We then develop a conceptual model to explain how the severity and timing uncertainty of expected tariff increases influence a firm's speed of adapting to the changing tariff environment. Specifically, we explore firms' propensity to form or delete ties to suppliers, which influences supply base complexity. Moreover, we consider factors that moderate the relationship between severity, timing uncertainty, and supply base complexity, including a tariff's geographical scope, a firm's relative purchase spend, and supply risk. Our conceptual model offers both research and managerial implications.
KW - Resource dependence theory
KW - Supply base complexity
KW - Supply network
KW - Tariffs
KW - Total cost of ownership
KW - Trade barriers
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U2 - 10.1016/j.pursup.2019.100556
DO - 10.1016/j.pursup.2019.100556
M3 - Article
AN - SCOPUS:85069719503
SN - 1478-4092
VL - 25
JO - Journal of Purchasing and Supply Management
JF - Journal of Purchasing and Supply Management
IS - 4
M1 - 100556
ER -