Impact of trade wars on global supply chains

Abstract

Global trade wars have led to major disruptions in supply chains, exposing critical weaknesses in traditional supply chain models and highlighting an urgent need for resilience and adaptability. This thesis examines how trade conflicts such as the U.S.-China trade war and the Russia-Ukraine crisis—affect the supply chains of multinational corporations (MNCs). The primary focus of this thesis is on key themes, strategies, and frameworks that enable MNCs to navigate and strategies through strenuous times, empowering them in the process. This thesis is created by conducting an in-depth review of literature, analyzing debates around the trade-offs between the global supply chain resilience versus regional supply chains and short-term versus long-term resilience strategies.

Key adaptation strategies for MNCs include diversifying suppliers, regionalizing operations, and adopting digital tools to enhance visibility and manage risks more effectively, with a secondary focus on pre-emptive strategies to minimize risk prior to the onset of conflict. The thesis emphasizes the role of theoretical frameworks such as supply chain resilience theory, dependency theory, and contingency theory. These theories guide MNCs with solutions on how they respond to disruptions. It also discusses the increasing influence of socio-economic factors in building supply chain resilience, emphasizing the importance of collaborative approaches and sustainability.

Geopolitical instability has shocked global supply chains, suggesting that in order to reduce risk posed by these conflicts a balance between flexibility and efficiency should be implemented. Through proactive risk management and strategic adaptation strategies, MNCs can strengthen their ability to recover from disruptions and ensure long term sustainability. This study offers some general insights for supply chain managers and provides a foundation for further research.