Global Supply Chain Reallocation: NBER Study Reveals Structural Shifts

How would a 15-25% tariff on Asia sourcing affect your total cost and sourcing strategy?

Simulate imposition of tariffs on products sourced from traditional Asia hubs (15-25% rate). Model the impact on landed cost across your product portfolio, evaluate the breakeven point for nearshoring alternatives (Mexico, Central America, Southeast Asia), and assess which SKUs or categories would justify immediate sourcing changes vs. those where tariff absorption is cost-optimal. Include transportation cost changes and currency effects.

What if your primary Asia supplier shifts production to nearshore markets?

Model the impact if a key supplier in Asia reduces capacity in that region by 30-40% and shifts production to Mexico or Central America. Simulate changes to transit times (assume 2-3 week reduction vs. Asia but potential 1-2 week increase vs. current US/Mexico routes), transportation costs (shift from ocean to intermodal or air), and lead time variability during transition. Evaluate inventory buffers required and service level impact.

What capacity and lead time risks emerge if competitors accelerate nearshoring simultaneously?

Model a scenario where demand for nearshore capacity (Mexico, Central America, Southeast Asia) increases by 40-50% industry-wide as competitors execute reallocation strategies. Simulate supplier capacity constraints, lead time inflation, pricing pressure, and service level degradation if your organization cannot secure preferred capacity early. Evaluate the strategic benefit of early commitment to nearshore suppliers vs. waiting for costs to normalize.