Trump tariff chaos is a creating a cash cow for consultants
New York
CNN
—
While businesses across the US are fretting that President-elect Donald Trump's threat of new tariffs could mean a massive hit to their bottom lines, at least one industry is gearing up for the exact opposite.
With less than a month to go until Trump is back in the Oval Office, many businesses that ship goods to or from the US are facing crucial questions like: Should we move our production elsewhere? And if so, where? How much more will it cost? Will we have to change our prices because of that? Will that cost us customers?
These questions come as Trump vowed to levy across-the-board tariffs on everything the US imports, with the steepest on goods coming from China, followed by Mexico and Canada. The three countries are America's largest trade partners.
Then, last week, Trump upped the ante, pledging new tariffs on European Union nations unless they purchase more US oil and gas. "Otherwise, it is TARIFFS all the way," he said in a post on Truth Social, without specifying how high the tariffs would go.
The Canadian Pacific Kansas City Intermodal Terminal in Mexico. Last year, Mexico surpassed China to become the top exporter of goods to the US. But that could change now that President-elect Donald Trump is threatening new across-the-board tariffs on Mexican goods.
Mauricio Palos/Bloomberg/Getty Images
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Businesses are nervous not just about the size of the tariffs, but also the timeline. That's because from the very second Trump is inaugurated on January 20, he can instantly disrupt global trade at the flick of a pen with the ability to sign new tariffs into law. Countries that are subject to new tariffs could quickly respond with retaliatory tariffs on American-made goods, which could directly hurt export-heavy industries like oil and gas as well as chemical and auto manufacturing.
This could leave businesses with little to no lead time to prepare as they scramble to order last-minute bulk shipments of inventory or sign new manufacturing contracts with producers.
Left to their own devices under heightened stress, it's easy for businesses to make decisions which, in hindsight, could end up costing them a lot of money and customers simultaneously.
Enter the supply chain and trade consultants.
"I don't think anybody, or at least a conscientious participant in global trade, is looking to do business on the backs of chaos and suffering. But the fact remains that companies will forge ahead, and there will be work to be done from the consulting side," said Dan Gardner, president of Trade Facilitators, Inc., a Los Angeles-based consulting firm specializing in global supply chain and logistics management as well as US trade compliance.
Cranes used for shipping containers rise from the Port of Newark on September 30 in New York City.
Spencer Platt/Getty Images
Why they're in high demand
Lately, Gardner has been helping clients map out which countries can feasibly produce the goods they're seeking. His clients include importers and exporters spanning a wide range of industries and doing anywhere from $200 million to $2 billion in annual sales, he said.
Then he initiates conversations with contacts he has at factories located there. Finally, he provides them with estimates of what he refers to as "the total landed cost" of the product, which includes all customs duties, production and transportation expenses and any other costs associated with getting something from point A to point B. That gives clients a sense of how they can ultimately price goods to customers.
In most cases, he charges either a monthly retainer fee or sets up contracts with clients for projects with specific deliverables for a limited period, such as six months to a year, but in many cases they end up extending. Some of those projects, he said, have been put on hold until there is more information on what Trump will do with tariffs.
Herschel Wilson began stockpiling nonperishable food for his pets and his family of five as soon as President-elect Donald Trump was named the Republican nominee in August.
Courtesy Herschel Wilson
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But already, new business inquiries in advance of Trump's return to the White House are pouring in, Gardner, who has been a licensed customs broker in the US for over 30 years, told CNN. And some are even starting to change their production plans after consulting with him ahead of any new tariffs.
Joseph Esteves, CEO of Maine Pointe, a supply chain and operations consulting company that is part of the SGS Group, said many new clients are looking to avoid repeating mistakes from the pandemic. "It taught them the hard way to align their inventory with demand and prevent stockpiling of ineffective inventories," he told CNN. In other words, getting stuck with excessive inventory that goes unsold.
With the potential for new tariffs that could raise the cost of goods significantly, many businesses have begun to stockpile goods to avoid the possibility of having to raise prices. But, if consumer demand doesn't hold up, that risks replicating the pandemic situation, where businesses in some cases overordered inventory to get ahead of supply chain snarls intending to ensure they had enough to sell to customers. That's why many clients are coming to Maine Pointe for help to balance supply and demand while minimizing price impact.
Esteves is fully anticipating business to continue ramping up as Trump takes office. "I think we're going to have some very great consulting years," he said. To keep up with the likely influx of demand, he's gearing up to hire more workers, he added.
AI coming into play
Artificial intelligence is increasingly part of the supply chain and consulting space, enabling companies to offer tailored solutions. For some, it is at the very core of its business.
For GEP, a supply chain and procurement software company that also provides consulting services, its AI systems help companies track spending, manage thousands of suppliers, monitor inventory, oversee contracts, and receive real-time updates and alerts on prices and potential issues. The AI system also predicts disruptions and sources of cost savings.
"Contingency planning services are absolutely the hot topic," said John Piatek, vice president of consulting at GEP. "Customers are desperately searching for their next best plans in the current state, so when tariffs are introduced, they're able to move fast and before their competitors to reach those solutions."
That's because, if a competitor were to move production to a new location before a rival company, they could get a better rate. There's also the possibility that a production plant wouldn't be physically able to take on more work after signing a new contract with a different client.
Already, GEP is "very busy" with "new increased business related to the incoming Trump administration," Piatek told CNN. But once any new tariffs hit, it's likely only going to get busier, he said.
