A Deep Dive into Tariffs: Impact on Mexico-U.S. Trade Supply Chain with Simon Cohen
CNBC’s Lori Ann LaRocco recently had an enlightening conversation with Simon Cohen, the charismatic founder and CEO of Henco Global, to discuss the intricacies of tariffs and their far-reaching influence on the Mexico-U.S. trade supply chain.
Background: The Tariff Tussle
Before delving into the specifics, let’s first establish some context. The ongoing trade tussle between the United States and Mexico has resulted in the implementation of various tariffs. In June 2019, the U.S. imposed a 5% tariff on all Mexican imports, with plans to gradually increase it up to 25% in October 2019. Mexico retaliated with tariffs on U.S. goods.
Impact on Henco Global and the Mexico-U.S. Trade Supply Chain
During the interview, Simon Cohen shared his insights on how these tariffs are affecting Henco Global and the broader Mexico-U.S. trade supply chain. He began by discussing the logistical challenges:
- Increased complexity: The tariffs have led to added complexity in the supply chain. Companies are now required to determine which goods will be subjected to tariffs and how to mitigate the associated costs.
- Transportation adjustments: The tariffs have resulted in a shift in transportation patterns. Some companies are rerouting their supply chains to avoid tariffs, while others are opting for more expensive air freight instead of sea freight.
Moving on, Cohen discussed the financial implications:
- Cost increases: The tariffs have led to increased costs for companies. The additional tariff fees, combined with the costs of rerouting supply chains or using more expensive transportation methods, can add up quickly.
- Price hikes: In some cases, companies are passing on these increased costs to their customers in the form of higher prices.
Impact on Consumers and the World
While the above discussion focused on the impact on Henco Global and the Mexico-U.S. trade supply chain, it’s important to remember that these tariffs have far-reaching consequences. Based on other reliable sources:
1. Consumers:
- Higher prices: Tariffs on goods imported from Mexico can result in higher prices for consumers in the U.S.
- Reduced selection: Some retailers may reduce their offerings of Mexican-origin goods due to the increased costs.
2. Global Economy:
- Trade tensions: The ongoing tariff tussle between the U.S. and Mexico can contribute to increased trade tensions between countries, potentially leading to a global economic slowdown.
- Supply chain disruptions: The implementation of tariffs can lead to supply chain disruptions, affecting various industries and economies around the world.
A Way Forward
As the tariff situation continues to evolve, it’s essential for businesses to stay informed and adapt accordingly. This may involve exploring alternative supply chain routes, negotiating with suppliers, or finding ways to absorb the increased costs. Ultimately, the goal is to minimize the impact on the business and its customers.
In conclusion, the ongoing tariff tussle between the U.S. and Mexico is having a significant impact on the Mexico-U.S. trade supply chain. Companies like Henco Global are grappling with increased complexities, logistical challenges, and financial implications. The ripple effects are far-reaching, affecting consumers and the global economy as a whole. As the situation unfolds, it’s crucial for businesses to stay informed and adapt to the changing landscape.
