Latest / Beyond Fulfillment Podcast / Tariffs, Trade Wars, and AI: Preparing Your Business for a New Global Supply Chain

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Tariffs, Trade Wars, and AI: Preparing Your Business for a New Global Supply Chain · Beyond Fulfillment Podcast

• 0:00
  Foreign.
• 0:06
  Hi, everyone.
• 0:07
  Dave Goulis back on a special edition of the Beyond Fulfillment podcast with my good friend Jim Tompkins.
• 0:13
  Hello, Jim.
• 0:14
  Hi, Dave.
• 0:15
  Good to see you today.
• 0:16
  Likewise.
• 0:17
  Good to see you, Jim.
• 0:18
  Appreciate you taking the time.
• 0:19
  And we've got a full agenda here, so let's get right into it.
• 0:25
  So we've got a new topic today, which is digital supply chain command centers.
• 0:31
  We'll be getting into that shortly.
• 0:32
  But prior, virtually all of our podcasts have been about the tariffs.
• 0:37
  And I know several of these areas are still very much pending.
• 0:40
  So let's just talk about those for a minute.
• 0:42
  And those areas are Brazil, the USMCA and then India, Russia, China.
• 0:48
  Can you talk about what's happening on these three fronts?
• 0:51
  Sure.
• 0:52
  And it's, it's a very interesting time, to say the least.
• 0:58
  Beginning with Brazil, of course, past President Bolsonaro last week got sentenced to 27 years and three months in jail.
• 1:10
  He's not serving in jail right now.
• 1:12
  He's under house arrest.
• 1:14
  But Balls and arrow are, is 70 years old.
• 1:17
  And so if we would believe that sentence, the man would die in jail.
• 1:24
  The reality is there's an election next year.
• 1:30
  It's highly unlikely that Lulu, the present president, will be re elected and the real adversary here is the head of the Supreme Court.
• 1:42
  And so it appears that Bolsonaro is going to wind up under house arrest and maybe do some jail time before the next election.
• 1:53
  This is in President Trump's mind an absolute travesty that Bolsonaro did absolutely nothing wrong and that this is just excuse to face a trumped up charge that President Trump doesn't agree with.
• 2:10
  And so President Trump has put a 50% additional tariff on all goods coming from Brazil that includes substantially beef, coffee, iron ore, steel and aluminum.
• 2:29
  And so there's huge amount of products that's exported from Brazil to the United States.
• 2:35
  In fact, the United States has a surplus with respect to Brazil.
• 2:41
  And so additional tariffs really aren't under consideration from a reciprocal point of view.
• 2:48
  So this is more of a political issue.
• 2:51
  And it's really a problem because there were some tariffs on goods that were as high as 26%.
• 2:59
  And so those goods have now gone to 76%.
• 3:03
  And so it's clear the cost of coffee, the cost of beef are going to increase in the United States because Trump is not going to back down and Lulu is not going to back down.
• 3:15
  In fact, as we try to look at where this is going to wind up, what we see is that Lulu has now got even more engaged with Brics and the Brazilian, Russian, India, China and then several other countries
• 3:35
  are banning together to form a new, quote, Southern Hemisphere, which is going to be the direct enemy of the Western Hemisphere.
• 3:48
  Big meeting in Brazil a couple weeks ago.
• 3:53
  Lulu has accepted the presidency of BRICS.
• 3:57
  Brazil has, and they have over 100 additional BRICS meetings planned.
• 4:02
  And so it appears that there's not going to be an agreement reached.
• 4:08
  It agrees.
• 4:09
  It seems very clear Trump is going to remain dug in and that Brazil is going to be changing its allegiance and going with the BRICS group.
• 4:23
  And therefore global trade between Brazil and the United States will become a major problem and Brazil will go in a different direction.
• 4:34
  I don't see that changing before the election next year.
• 4:38
  And so I'm marking this in the column of one where we just can't agree and it's going to go in a different direction until next year's election.
• 4:47
  So Brazil is a problem.
• 4:49
  It's interesting enough it's a bigger problem for Brazil than it is the United States.
• 4:54
  But Brazil, Lulu has really dug in and so it is where it is.
• 5:01
  A better situation for the US Is with what's going on with Canada and Mexico.
• 5:09
  As we know, the USMCA is an agreement through 2036, but there is an agreed to date of July of 2026 where changes are expected to be made.
• 5:29
  And they expect to be made before July of 2026.
• 5:34
  And so that will take place.
• 5:36
  There will be some changes in the USMCA at this point, mostly not from a trade point of view, but from a drug traffic point of view.
• 5:48
  Fentanyl is a major problem between US and Canada and us in Mexico in President Trump's eyes.
• 5:57
  And so this has got quite a bit of digging in on his part.
• 6:00
  At the same time, there has been preparations with Canada, Mexico and the US Working together jointly to start looking at the review that's going to take place.
• 6:11
  And I believe a deal will be done here either in late 2025 or early 2026.
• 6:20
  So, so this one will get resolved.
• 6:23
  It will get resolved in a way that is friendly.
• 6:27
  We keep having which is the most adversarial with the U.S.
• 6:31
  originally it was Canada was more adversarial, then it was Mexico, then it went back to Canada and now it's back to Mexico.
• 6:39
  So it keeps flopping back and forth and a lot of, a lot of talk, a lot of puffing out the chest.
• 6:46
  But the fact of the matter is this is going to get settled and I believe before the end of first quarter of 2026, we're going to have this review done, and we'll have a new USMCA in place that
• 6:58
  allows the trade within North America to be robust.
• 7:04
  The third one is kind of the big kahuna at the table.
• 7:10
  Indiana.
• 7:11
  So Indiana.
• 7:12
  India.
• 7:13
  I was in.
• 7:13
  I was in Indiana.
• 7:14
  I was in Purdue last weekend.
• 7:16
  So that's where that came from.
• 7:17
  But India, Russia and China, a huge deal with a lot at stake.
• 7:25
  You know, we got the most populous nation and the second most popular nation in the world with India and China.
• 7:34
  Both have huge economies, obviously.
• 7:37
  And right in the middle of this discussion is President Trump's secondary tariff on India buying oil from Russia.
• 7:48
  If India would stop buying oil from Russia, Russia would collapse.
• 7:53
  And that's why Putin is continuing to escalate the war with the Ukraine, because India is holding cards at this point.
• 8:02
  India, however, has worked very, very, very hard to remain neutral on the Russia, China versus the US Western bloc perspective and has tried to wind up to want to be friends with everybody.
• 8:19
  But at the same time, they're doing military maneuvers with Russia and China.
• 8:23
  They are allowing Russia to continue the war in the Ukraine by buying their oil.
• 8:28
  And I think the gig is up because President Trump has said, no, no, no, we're going to place a very substantial tariff on you, India, if you do not accept the secondary tariff and stop buying oil from Russia.
• 8:45
  So this is the big one.
• 8:47
  What's going to happen?
• 8:49
  Well, it boils down to dependencies.
• 8:53
  And the fact of the matter is China is in a weak position.
• 8:57
  The real estate market is a mess.
• 9:00
  The.
• 9:00
  Their demographics are a mess.
• 9:02
  They have more old people than they have young people.
• 9:05
  And so China is not in a real strong position, although they've done a really good job of positioning themselves for the future, their future.
• 9:14
  The cards aren't with them.
• 9:16
  India depends totally on the US for export.
• 9:20
  50% of India's exports come to the United States.
• 9:24
  If India continues to buy oil from Russia at the level they are now, they will have a huge hit to their economy.
• 9:33
  And I don't think India wants to do that.
• 9:35
  So what Trump will be doing, I believe, is he will be forcing India to kind of leave their neutral position and India will reduce the oil advice from Russia.
• 9:48
  I don't think they'll eliminate it.
• 9:49
  I think they will reduce that, which will hurt Russia.
• 9:54
  India will continue to do trade, and Trump will slack on the tariffs to India and India.
• 10:01
  US Will continue to be a major global trade route, at which point Russia will be in difficulty with respect to the Ukrainian war.
• 10:10
  That war will be over, at which point the US And China will do a deal after India does the deal.
• 10:17
  I believe that will all happen early in 2026 and as well.
• 10:24
  And so from my perspective, and today we're recording this on September 19, 2025.
• 10:32
  And just a note for everyone, that's day number 243 since President Trump became the 47th president of the United States.
• 10:41
  It seems like a lot longer than 243 days to me, though.
• 10:46
  It seems like 47 has been in office for maybe two years or something.
• 10:50
  But it isn't.
• 10:51
  It's 243 days today and it's 100 and somewhere around 170 days since Liberation Day.
• 11:04
  And so the date when Trump put all the tariffs on the 90 countries he placed those on.
• 11:10
  And so it's relatively quick this all has happened.
• 11:15
  But I believe by the end of the year or early in 2026, 90 to 95% of the global GDP will have stabilized reciprocal tariffs.
• 11:29
  I believe 85 to 90% of the US trade deficits will have stabilized reciprocal tariffs.
• 11:38
  I believe the average tariff rate is going to be someplace between 18 and 22%.
• 11:45
  Interesting.
• 11:46
  When I started talking about this about 150 days ago, I said I thought it would stabilize at 20%.
• 11:53
  And so what I've now done, not by hindsight, but by looking at what the future is, I now think it's going to stabilize at 18 to 22%, which is obviously right on the 20% I predicted 150 days ago.
• 12:10
  I believe tariff revenues, which was 77 billion in 2024, I think they're going to be 250 billion in 2025.
• 12:20
  And they're not going to go much up going forward.
• 12:22
  It's going to be around 275 billion.
• 12:25
  And the reason it's only going up by 25% is because Trump traded investments in US manufacturing as a trade off against tariffs.
• 12:38
  And in the process, Trump has raised in the first 243 days of his administration $7 trillion that are being invested by U.S.
• 12:50
  companies, by foreign countries and by foreign governments into the United States.
• 12:57
  And so that's just flat amazing.
• 13:00
  So bottom line, Brazil is going to continue to be a problem.
• 13:04
  It's probably going to wind up with a 50% tariff.
• 13:08
  Canada and Mexico are going to fall in line.
• 13:12
  India will fall in line, which will end the Russian, Ukraine war, and then Trump and China will do a deal.
• 13:19
  I believe this will all be done late 25, first quarter of 2026.
• 13:25
  So things are progressing very well.
• 13:28
  And the supply chain executives in the United States are breathing a sigh of I hope so, because the uncertainty has really had a terrible impact on them.
• 13:40
  So a brief update on tariffs.
• 13:43
  Things are going well.
• 13:46
  President Trump is addressing the things he ran on, which is eliminate the trade deficit and move towards a balanced budget.
• 13:58
  So, so I believe the golden days are going to return to the United States and the economy is going to do well and inflation will be under control.
• 14:08
  And so very positive times ahead for the Western bloc of the, of the, of the world and led by the United States.
• 14:20
  Okay, appreciate that insight, Jim, and all those updates on all those pending issues.
• 14:26
  Let's get into our topic today.
• 14:28
  And one thing you told me was a shift in your thinking about the Panama Canal as that becoming more than just a digital logistics control tower, but actually a digital supply chain command center.
• 14:43
  Can you talk about what caused your change in thought on all that?
• 14:47
  Yeah, and it's a major shift in my thinking.
• 14:51
  You're right on that, Dave.
• 14:53
  And the thing that gave me this, what I think is insight.
• 15:00
  Some people might think it's a fantasy, but I think it's insight is first of all, the tariffs impacted global trade, which impact reglobalization.
• 15:13
  And so as we've talked, Dave, this re globalization, which is a combination of near shoring, reshoring and friendly shoring, the combinations of those have resulted in substantial changes in the trade routes.
• 15:27
  And as we look at the substantial changes in the trade route, it's going to change the importance of the Panama Canal because Panama is where the north meets south and the east meets west in this hemisphere.
• 15:42
  And so I believe there's going to be a major change in, in the role the Panama Canal plays.
• 15:49
  So that's the first major difference.
• 15:51
  The second major difference is the explosion of AI.
• 15:57
  And you know, you hear about that in every podcast on every news show.
• 16:03
  It's AI, AI, AI.
• 16:05
  And the reason is because it's really coming into its own and we have unbelievably powerful capabilities.
• 16:13
  And so I see the change from it being a logistics center instead to supply chain and going from a control tower to a command center is now being real.
• 16:28
  The need is there because of the tariffs, the global trade, and the increased importance of re globalization and the technology meets it at the same time with AI.
• 16:42
  And so this is what's led to a major shift in my thinking.
• 16:48
  Okay, all right.
• 16:50
  And what's the difference between a digital logistics control tower and then a digital supply chain command center?
• 16:59
  Yes.
• 16:59
  So that's, that's the heart of the matter here.
• 17:04
  A digital logistics control tower, first of all.
• 17:07
  Well, so the differences are we took the word logistics out and put the word supply chain in, and we took the word control tower out and we put in a command center.
• 17:18
  So why did we go from logistics to supply chain?
• 17:21
  Why did we make that shift in thought?
• 17:24
  The logistics control tower, or as people tend to say, the logistics hub of the Western hemisphere, the Panama Canal, is about ships and containers.
• 17:38
  And so that's the whole topic is logistics is ships and containers, and how are we controlling and having visibility into ships and containers.
• 17:50
  And so a digital logistics control tower is looking at where are the ships, where are my containers?
• 17:58
  And what I'm trying to do with a control tower in is know their current status.
• 18:03
  And so that is a pure visibility play.
• 18:07
  And so now we can tell everybody exactly where your containers are, exactly where the ships are, that the containers are on, or if the containers are offloaded on the west side of the of Panama and go by rail
• 18:23
  to east side or east to west on rail, or if it's on a ship in the canal or it's a ship waiting to get it in the canal, we can have all that information of a control tower knowing
• 18:36
  where everything is.
• 18:37
  And so with a digital logistics control tower, you know where all your ships are, you know where all your containers are.
• 18:49
  And so you have a great understanding of the current status.
• 18:53
  That's what you have with a digital logistics control tower.
• 18:57
  Now, when you shift that to a digital supply chain command center, you're really stepping up in two ways.
• 19:07
  Number one, you're going from just looking at the logistics part of the containers and the ships to looking at the entire supply chain all the way back from the raw material, all the way into being made into product,
• 19:22
  into being assembled, being packaged, being transported, being delivered to the distributor, delivered to the retailer, bought by the consumer.
• 19:34
  And we are looking at end to end, from raw material to a happy consumer saying, ah, I got a new shirt.
• 19:41
  And so it's now the full supply chain that we're interested in.
• 19:45
  So we're not just interested in where the ships and the containers are.
• 19:50
  I'm interested in where are the buttons for the shirt, where is the thread for the shirt, where is the material for the shirt?
• 19:57
  And then how are those materials being turned into shirts?
• 20:01
  And how are those shirts being packaged and shipped and where are they now and where are they going?
• 20:07
  When did they land at the port in the United States or wherever they're heading, and when did they get shipped from there and when did they get delivered to the retailer and when do they show up in the
• 20:18
  store?
• 20:19
  Or when did you do a B2C and have it delivered to my front door?
• 20:23
  And so we're going to literally go from sheep who's given cotton to the retailer, delivering it to you in your front end.
• 20:32
  And so that's the difference between a logistics and a supply chain.
• 20:40
  And that's the difference from a control tower to now a command center.
• 20:45
  So a command center has as its foundation knowing where everything is, but then it also has the ability to determine problems in that supply chain.
• 20:58
  Oh, this ship is late.
• 21:00
  And therefore we need to make this change.
• 21:02
  We need, oh, this ship needs to get through the canal first.
• 21:05
  And so we're going to prioritize that going through the canal or that ship needs to get to the terminal first and get unloaded so that we can do this.
• 21:13
  And so now we're going to have the ability not just to know where it is, but to understand how do we execute so that that retailer has the shirt on their shelf and they can ship to the client
• 21:26
  when they said in their sales flyer.
• 21:29
  And so this is a whole different word.
• 21:32
  A control tower is visibility.
• 21:34
  A command center is really taking command of, of getting that product delivered where it's supposed to be, when it's supposed to be delivered.
• 21:43
  And so it's a, it's a huge, huge, huge game.
• 21:47
  We've gone from just a logistics environment to a full supply chain.
• 21:53
  And we've gone from just visibility to total execution through that entire supply chain all the way up to the customer.
• 22:01
  So it's kind of like what's the difference between a mouse and a person?
• 22:06
  Well, they're totally different.
• 22:09
  That's what we have here.
• 22:10
  A control tower and a command center are totally different.
• 22:14
  And a logistics hub is totally different than a supply chain end to end ecosystem.
• 22:20
  So it's a whole new way of thinking as a result of where we are and where we're heading.
• 22:28
  Okay, so it sounds like the flow orchestration is a major outcome of having a digital supply chain command center.
• 22:36
  Yeah, I mean, flow orchestration is the key.
• 22:41
  And Dave, you just put your finger on that.
• 22:46
  And so what is flow orchestration?
• 22:49
  Orchestration, we're thinking about the conductor orchestrating the orchestra or the band or whatever is playing music.
• 23:01
  And what the orchestration does, it synchronizes all the instruments.
• 23:09
  So it in fact is music and not noise.
• 23:12
  And so the guy does like this.
• 23:14
  And the saxophone players start, he goes like this.
• 23:16
  The violin starts playing and he goes like this.
• 23:19
  And the cello Starts playing.
• 23:20
  And so the orchestration is about the synchronization of all of the components of the end and supply chain working together to make beautiful music.
• 23:36
  When we have flow orchestration, we truly, truly, truly have resilience.
• 23:44
  And it's based on real time information.
• 23:48
  And so if you look at what happened in supply chains when Covid hit, we didn't know what the left hand and the right hand.
• 23:55
  We got companies saying, oh, we're going to have this product delivered on Tuesday afternoon at 2 o'.
• 24:00
  Clock.
• 24:01
  Tuesday afternoon at 2 o' clock, the head of supply chains out at the dock and said, there's no trucks.
• 24:06
  And so they call up the port and say, where's the product?
• 24:09
  He said, oh, your container didn't make the shipments, it's still in China.
• 24:13
  And here the guy's planning on the truck coming in, he's got second shift ready to start manufacturing on this product and it doesn't come.
• 24:21
  And so what we have now is real time visibility that gives us resilience to make sure the supply chain is going to deliver what it's supposed to deliver to make this happen.
• 24:33
  But to make that happen, I'm sorry, to make that happen, we have to be proactive, not reactive.
• 24:41
  Control towers are reactive, command centers are proactive.
• 24:48
  And so we're going to have digital twins that allow us to simulate if this happens and this happens and this happens, then the result will be here.
• 24:57
  And therefore we need to use AI to execute ourself around those disruptions so that we can have an autonomous real time response.
• 25:10
  So a storm hits, everything's not going to be able to leave the port for four hours.
• 25:15
  If you can't leave the port for four hours, that means the slots not going to be available for the next ship to come in.
• 25:20
  What does that have to do with what we need to do and how do we.
• 25:24
  Maybe there's a container on that ship that we need to take off of that ship and put on this ship.
• 25:28
  And so we need to have a real time ability to work.
• 25:33
  And then the last portion of this flow orchestration is to use machine learning to learn the impact.
• 25:42
  Oh my goodness.
• 25:43
  Last week we had this happen and this happened and that had this impact.
• 25:47
  We now can use machine learning to say, ah, we can avoid that this week because we know this and this and this are going to tie together.
• 25:54
  And what happened is we had space at the port, but we didn't have crane capacity.
• 25:58
  So because we're limited on crane capacity, we now need to make a decision which of these Containers gets off to ship first.
• 26:05
  And how do we process that?
• 26:07
  And so that is flow orchestration.
• 26:10
  It's the conductor.
• 26:11
  The conductor in our situation is the command center is going to keep the band playing together and make beautiful music because we will have flow orchestration as a result of the real time AI enabled, ML enabled digital command
• 26:32
  center.
• 26:34
  Okay.
• 26:35
  All right.
• 26:35
  And so this concept of a digital supply chain command center, is that something that's applicable to a company or is that really only applicable to like a major supply chain hub like the Panama Canal?
• 26:49
  It Good question.
• 26:51
  And it depends on the timing.
• 26:54
  Today the concept is, is futuristic.
• 27:00
  We're probably a year away from this being applicable to companies.
• 27:06
  It's probably two or three years away before it's fully developed for something as complex as the Panama Canal.
• 27:15
  So this is equally applicable to individual companies.
• 27:20
  In fact, companies that have put in place a control tower, what they oftentimes need to do is just add some greater awareness of the supply chain because control towers are basically logistics, not supply chain.
• 27:35
  But we have to put the concept of supply chain and then we put in the AI and we can convert a control tower to a command center.
• 27:43
  And so this is something definitely applicable to companies.
• 27:47
  This is something that companies need to be working on.
• 27:50
  And this is something that's going to result in a tremendous success for the companies to get ahead of this and take the lead.
• 27:56
  And it's really going to allow the flow of re globalization.
• 28:03
  Okay.
• 28:04
  All right.
• 28:04
  And Jim, how can listeners learn more about your thinking on these digital supply chain command centers?
• 28:11
  Well, as usual, I wrote something that's how I come up with these ideas.
• 28:18
  I actually was working on what I thought needed to take place in Panama.
• 28:26
  And when I was working on that, I came up with this white paper.
• 28:31
  And Dave, I think you have said that you're going to put a link at the end of this recording so that they can get the white paper.
• 28:41
  Or if you're just listening and don't have the ability to see it, you can go to the Tompkins Ventures website and on the Tompkins Ventures website look under Insights and then look under white papers.
• 28:56
  And what you want to get is the paper that says from Gateway to Guiding Light.
• 29:02
  And so it's no longer just a gate that we're going to have a visibility of what's happening.
• 29:08
  It's now going to be a guiding light that allows floor orchestration to make products flow in real time to satisfy customer needs.
• 29:18
  Okay.
• 29:19
  Yes.
• 29:19
  And we will absolutely link that in the show notes so everyone can download it, load it and get more of your insights on this concept.
• 29:27
  All right.
• 29:28
  Yeah.
• 29:29
  That's all the time we have today, Jim.
• 29:30
  Appreciate you previewing this topic.
• 29:32
  Appreciate your insights on what's going on with the global trade environment so everyone can be aware and make the plans to adjust accordingly.
• 29:40
  And I know we'll be talking about this on a lot more in the coming months, so appreciate your time as always.
• 29:45
  Thanks, Dave.
• 29:46
  Pleasure being here.