The effects of tariff increases on supply base complexity: A conceptual framework

Sangho Chae, Carlos Mena, Mikaella Polyviou, Zachary S. Rogers, Robert Wiedmer

Research output: Contribution to journalArticlepeer-review

3 Scopus citations

Abstract

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.

Original languageEnglish (US)
Article number100556
JournalJournal of Purchasing and Supply Management
Volume25
Issue number4
DOIs
StatePublished - Oct 1 2019

Keywords

  • Resource dependence theory
  • Supply base complexity
  • Supply network
  • Tariffs
  • Total cost of ownership
  • Trade barriers

ASJC Scopus subject areas

  • Strategy and Management
  • Marketing

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