Understanding Section 301 Investigations
The recent reopening of Section 301 probes has reshaped the landscape of international trade, particularly affecting relationships with major partners such as China, Mexico, and the European Union. With the Supreme Court’s decision regarding the International Emergency Economic Powers Act (IEEPA), businesses must now brace for potential new tariffs or trade-related fees. Understanding these investigations is crucial for effective sourcing strategy planning.
Scenario Planning Methodology
Rather than predicting the outcome of these investigations, companies should focus on scenario planning to prepare for various possibilities. This involves developing three distinct cases for each major sourcing lane: best-case, worst-case, and moderate-case. By evaluating each scenario, businesses can gauge the potential impact on their supply chain and identify necessary adjustments.
Assessing Landed Costs and SKU Implications
For each case developed, it’s important to calculate the landed cost of products. This should include not only manufacturing costs but also anticipated tariffs and shipping expenses, which may fluctuate based on case scenarios. Identifying specific SKUs that are most susceptible to these cost changes allows businesses to manage risks effectively and adapt their sourcing strategies in response to trade developments.