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Trade Wars & Procurement: How Businesses and Consumers Must Adapt to Trump's New Tariffs
Exploring the complexities of global supply chains, their benefits, risks, and the challenges of shifting toward localization, using Boeing’s outsourcing as a case study.
Global supply chains are the arteries of modern commerce, managing over $33 trillion in trade annually, with more than 80% of goods by volume shipped by sea (UNCTAD Global Trade Update). These networks connect suppliers, manufacturers, and consumers across continents, enabling efficient production and delivery. Over decades, supply chains have evolved from local operations to complex global systems, driven by cost efficiencies, access to advanced technologies, and the need to meet diverse consumer demands. However, their complexity introduces risks—disruptions from pandemics, trade disputes, or natural disasters can halt operations worldwide - but so can man-made disruptions.
Recent tariff discussions have fueled calls for localization, but unwinding these networks is a daunting task.
We will take a look at the complexity, benefits and risk of the global supply chains partly through the leans of Boeing’s outsourcing challenges and broader economic insights. This piece explores why global supply chains dominate, their vulnerabilities, and the formidable barriers to shifting toward local or regional models.
The Evolution of Global Supply Chains
In the early 20th century, manufacturing was largely local, with factories near raw materials serving nearby markets. The 1950s introduced containerization, standardizing cargo and slashing shipping costs (UNCTAD Maritime Transport). By the 1980s, information technology, such as enterprise resource planning systems, enabled real-time coordination across borders. The 1990s e-commerce surge demanded faster, cheaper delivery, pushing firms to source globally. Today, a product like a laptop or your phone will very likely include components from dozens of countries, reflecting the scale of these networks.
Some of the key drivers for this major globalization push include:
- Cost Savings: Sourcing from low-wage regions like China, Bangladesh, Mexico, Vietnam etc. reduces expenses, enabling competitive pricing.
- Employee expertise: Rapid access to high volume of skilled labor as seen in the technology manufacturing hubs in China.
- Technology Access: Specialized expertise, such as Taiwan’s semiconductors, Germany’s engineering, etc. are critical in driving innovation.
- Market Expansion: Global supply chains allow firms to more easily reach diverse consumers, from Asia to Europe.
- Efficiency: Fragmented production optimizes each manufacturing stage, speeding up delivery.
The Benefits of Globalization
Global supply chains obviously deliver significant advantages. Labor arbitrage alone can cut production costs by 30-50% compared to domestic manufacturing in high-wage countries such as the US.
The Risks of Complexity
Coordinating suppliers across regulations, languages, and time zones is a logistical challenge. A single disruption—a factory shutdown in Asia, a stuck container vessel in the Suez or a port delay in the U.S.—can paralyze global production. The COVID-19 pandemic highlighted this, with China’s lockdowns causing shortages of anything from semiconductors and medical supplies (HBR Post-Pandemic Supply Chains) to standard household goods. Geopolitical tensions, like U.S. vs. the world tariff disputes, introduce uncertainty, with tariffs altering cost structures and thus rapidly forcing a change in short/medium term supply patterns. Natural disasters, such as Japan’s 2011 tsunami, disrupted key hubs,
Emerging risks include rising wages in developing nations, eroding cost advantages, and cyberattacks targeting digital systems. In 2023, 71% of firms flagged raw material costs as their top threat, signaling persistent volatility (Procurement Tactics 2025) which is further increased with the tensions on tariffs hitting or potentially hitting all kinds of goods and services. These vulnerabilities drive interest in localization, but Boeing’s experience illustrates the challenges of reversing global reliance.
Boeing’s Outsourcing Odyssey
Boeing, a leading aerospace manufacturer, provides a stark example of global supply chain dynamics. Historically vertically integrated, Boeing shifted course in 2004 with the 787 Dreamliner, outsourcing 70% of its design, engineering, and manufacturing to over 50 global suppliers (Forbes Boeing Outsourcing). The aim was to reduce costs, leverage global expertise, and accelerate development.
Initially, the strategy showed promise. Suppliers in Japan, Italy, and elsewhere provided advanced composites, enhancing the 787’s efficiency. Outsourcing lowered upfront costs, and Boeing secured global orders. However, complexity soon overwhelmed the benefits.
Challenges and Setbacks
- Coordination Issues: Managing a vast supplier network, often with subcontractors, led to miscommunications. Unlike Toyota’s close supplier model, Boeing struggled with oversight (Supply Chain Digital).
- Quality Problems: A January 2024 incident, where a 737 Max 9 door plug failed mid-flight due to missing bolts, caused a 16% stock drop (Aviation 24). The 2018 and 2019 737 Max crashes, killing 346, exposed oversight lapses.
- Delays and Costs: The 787 was delivered three years late, $10 billion over budget, due to issues like misaligned fuselages and defective materials.
- Ongoing Issues: In 2025, 60% of aerospace suppliers cite Boeing’s 737 Max production as the industry’s top challenge. Delivery delays force airlines like Southwest to use older planes (Reuters). A 2024 machinists’ strike, resolved with a 38% wage increase, further disrupted operations (Labornotes).
Boeing’s dependence on global suppliers diminished its in-house expertise, complicating efforts to regain control. CEO Kelly Ortberg’s call for “core competencies” signals a long-term rebuild (Leeham News Boeing). This case underscores the difficulty of reversing global supply chain reliance.
The Barriers to Localization
Calls for localized supply chains, amplified by 2025 tariff policies, may appear to be straightforward operational issues to manage, but they face significant obstacles. Global networks deeply integrate companies like Boeing, with suppliers spanning continents.
| Barrier | Description | Boeing Example |
| Deep Integration | Global chains are interwoven, with components sourced worldwide. | 787 suppliers span Japan, Italy, and the U.S. |
| Loss of Expertise | Outsourcing erodes in-house skills, requiring years to rebuild. | Boeing struggles to regain design know-how. |
| High Costs | Domestic production in high-wage countries raises expenses. | U.S. assembly would increase labor costs. |
| Time-Consuming | Transitions disrupt operations for years. | Boeing’s quality fixes delay recovery. |
| Economic Impact | Localization could disrupt trade, raising prices. |
Higher aircraft costs would affect airlines. |
In 2023, supply chain disruptions cost firms $1.5 million daily, highlighting the stakes (Procurement Tactics 2025). Higher domestic costs could increase consumer prices, and global trade’s interdependence risks economic fallout. The WTO projects tariffs could reduce global trade by 1.5% in 2025 (WTO Trade Outlook 2025).
Reflections on Rolling Back Global Supply Chains
The debate over global versus local supply chains is a critical issue for procurement professionals. Can global supply chains be rolled back? If so, what would it take? Is such a shift likely?
Can Global Supply Chains Be Rolled Back?
Research suggests global supply chains can be rolled back, but the process is complex (HBR Post-Pandemic Supply Chains). The deep integration of global networks requires untangling supplier relationships, contracts, and logistics. However, examples like Walmart, which localizes inventory to match regional demand, show localization is feasible in some contexts (Planergy) but likely not across all of a companies services and products. The trend toward regional manufacturing, spurred by disruptions like COVID-19, indicates progress, particularly in industries critical to national security or public health (IMD Localization), but the effects being seen these years is across most of not all industries and not just the ones originally affected by the pandemic.
What Would It Take?
Shifting to local or regional supply chains demands significant effort:
- Building Local Supplier Bases: Many industries lack robust local suppliers due to decades of offshoring. Rebuilding requires identifying and qualifying new suppliers, ensuring they meet quality and reliability standards. This all involves market analysis, supplier audits, and long-term partnerships (Supply Chain Nuggets).
- Redesigning Products: Products designed for global components may need adaptation to local materials or manufacturing capabilities. This could mean simplifying designs or using alternative materials, potentially affecting performance or cost (GEP Localization Benefits).
- Investing in Infrastructure: New factories, workforce training, and government incentives are essential. For example, Japan has incentivized firms to relocate production to Southeast Asia, a model applicable to domestic localization (CTSI Global Localization).
- Managing Costs: Localization often raises costs in high-wage countries. Firms may offset this through economies of scale, government subsidies, or higher prices, though consumer acceptance varies (AuthenticateIS Ascertain Benefits).
Is It Likely?
Evidence leans toward a gradual shift to more localized or regional supply chains, driven by geopolitical tensions, economic nationalism, and lessons from disruptions (HBR Post-Pandemic Supply Chains). However, a complete rollback is unlikely due to global trade’s economic benefits. In 2024, 54% of U.S. manufacturers planned to source from North America, signaling intent but not full commitment (USPS Delivers). Industries like automotive and pharmaceuticals are exploring nearshoring—moving production closer to markets—to reduce risks (Extensiv Localization). Hybrid models, balancing global efficiency with local resilience, are emerging as a practical solution (The Supply Chain Xchange).
Conclusion
Global supply chains, while efficient, are vulnerable, as Boeing’s outsourcing challenges demonstrate. Rolling back to local systems is possible but requires rebuilding supplier bases, redesigning products, and significant investment. While a full rollback is improbable, the trend toward hybrid models—localizing critical components while maintaining global sourcing—is gaining traction. As businesses navigate this shift, technologies like AI, used by 45% of supply chains in 2025, enhance resilience (Procurement Tactics 2025) and more advanced cost transparency tools like CostBits are becoming a hard requirement for most senior management teams. The future likely holds a balanced approach, blending global and local elements to meet evolving economic and geopolitical demands.
See also our top 20 free advice for rapidly reducing supplier costs