Give in to American pressures or make the round back? Faced with the threat agitated by Donald Trump of an increase in customs duties on his so -called and coveted products, TSMC chose the first option. The world leader in the manufacture of semiconductors is preparing to unlock a new $ 100 billion envelope to invest in the United States. An amount that is added to the 35 billion dollars already topped with Joe Biden in 2022 at the time of the adoption of the Chips and Science Act. The case of the Taiwanese giant inevitably gives thought to European companies, which are made from the brain’s knots.
Because the Republican President has already announced the color: Washington will soon tax European products up to 25 %. What maturity? What will be the sectors concerned? As usual, Donald Trump is careful not to give details. In the meantime, old continent companies must prepare. “We observe dynamics similar to those encountered during the COVID crisis. It becomes essential to be proactive,” said Stéphane Crosnier, director general of the Paris office in Inverto, a subsidiary of the Boston Consulting Group specializing in purchases and management of the supply chain. The first lever is to multiply stocks across the Atlantic in order to limit the repercussions of new customs duties when they will officially enter into force. A short lifespan solution. “This approach quickly reaches its limits: if it helps to mitigate the immediate impact, it does not guarantee the sustainability of the business,” warns Stéphane Crosnier.
Rethink the supply chain
With its teams, this expert has developed a tool for its customers to assess the cost of Donald Trump’s commercial policy. “The simulations produced show that as a function of the scenarios envisaged, the margin can deteriorate from a third party, or even more, completely overwhelming the economic equation,” he said. Proof that it is urgent to act, at the risk of seeing his business model threatened. Among the most exported products to the United States, including medicines, cars and medical and pharmaceutical equipment. Sectors where fine knowledge of the supply chain is vital. “Companies that have not carried out in-depth work to identify their vulnerabilities will be in a very delicate position,” said Anthony Gardner, former United States ambassador to the European Union, at an online conference recently organized by the Brunswick cabinet.
After the pandemic, large groups like Renault, Safran and Michelin have revised their way of manufacturing and delivering products, considerably improving their visibility on the supply chain. “It is now a real competitive advantage,” says Stéphane Crosnier. According to him, “it becomes imperative to reconfigure the supply chain, by adjusting the origin of the products, rethinking logistics flows and by assessing the incidence of customs duties on certain raw materials.” Except that many companies do not have internal skills to manage this type of file. “Identifying the chain links that contribute to the erosion of the margins is a first step. Once the priorities have been defined, it is necessary to assess the actions to be implemented and what part of the margin can be secure,” he continues.
The risky choice of relocation
While waiting for the wrath to fall on them, the Europeans have a card in their game: they will carefully observe what will happen in Canada and Mexico. “These countries are faced with measures relating to a volume of trade similar to that of the European Union, and could give indications on what awaits Europe”, judges Christopher Padilla, former under-secretary to international trade from 2007 to 2008 within the Bush administration.
There remains the most risky option: to consider, as TSMC, to relocate part of its production to escape taxation. A first movement had been observed after the vote in 2022 of inflation Reduction Act (IRA), with the departure of certain European companies attracted by massive subsidies of the American federal state. Except that Donald Trump is not Joe Biden. “Its unpredictability discourages investment and could encourage manufacturers to wait -and -see rather than relocating,” said economist Sébastien Jean. “The volatility of tariff decisions makes any long -term projection uncertain. An investor needs stability to make strategic decisions, and the risk that policy changes overnight represents an important brake”, abounds Fredrik Erixon, director of the European Center for International Political Economy (ECIPE). A cat and mouse game that is only in its infancy.
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