How political risks are adding complexities to supply chains

The COVID-19 pandemic has exposed the soft underbelly of global supply chains. To strengthen global supply chains, promote economic stability and improve national security, the US Government has announced a new industrial policy. Under the new policy, the Biden Administration will be focusing on two key areas: digital technology and climate crisis. There is likely to be an increased government involvement in promoting the domestic production of solar panels, wind turbines and energy-efficiency technologies. Such actions can help reshape global trade and set the stage for investment, infrastructure and innovation. 

Key takeaways:

• While some companies have developed resilient supply chains in response to the COVID-19 pandemic, others are still struggling. Political risks are making supply chains more complex.
• Companies and governments will need to focus more on strengthening supply chains. The outcome of industrial policies will be a balance between policy goals and economic imperatives.
• Future trade policies will be more targeted. This shift will be both good and bad for companies. It will be good because not many companies will get affected by new tariffs. However, those getting affected might suffer due to higher prices or reduced supplier options.

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