Rising global tensions and the looming threat of a global tariff war are sparking growing concerns about the impact on Europe’s supply chains. Kevin O’Marah, Chief Research Officer and co-founder of the community research platform Zero100, is set to speak at the World Economic Forum (WEF) in Davos, where he will discuss the world’s most pressing global trade issues.
Geopolitical tensions have escalated over the past year, fueled by ongoing conflicts in the Middle East and the war between Russia and Ukraine. The prospect of a global trade conflict intensified in recent months, particularly after the European Union imposed higher tariffs on Chinese electric vehicle (EV) imports. The EU’s actions stemmed from rising concerns over Chinese government subsidies to domestic manufacturers, prompting China to retaliate.
In response, China launched an anti-dumping investigation into EU brandy imports, and began scrutinizing pork and dairy products from the bloc. Tensions between the EU and the U.S. have also escalated, and with President Donald Trump soon to take office, the situation is expected to worsen. Trump has expressed dissatisfaction with EU tariffs on U.S. food, cars, and agricultural products and has even threatened to impose a blanket tariff ranging from 10% to 20% on all imports from the EU.
Similarly, U.S.-China trade relations remain fraught, due to longstanding disputes over unfair trade practices and intellectual property theft.
O’Marah, who co-founded Zero100, an organization focused on achieving zero-carbon solutions, shared insights on how global supply chains might be affected by these shifting trade dynamics. He emphasized that, similar to the disruptions caused by the pandemic, a global trade war could lead to significant supply chain bottlenecks, making processes more complex and slow. This could result in higher transportation and production costs, eventually raising prices for consumers.
Manufacturers may be forced to find new suppliers and customers, potentially restricting trade to specific geopolitical areas depending on the extent of the tariffs. When asked about the potential impacts of a worsening global tariff war on specific industries, O’Marah explained:
“An escalating trade war between the US and China is likely to isolate critical parts of certain strategic supply chains like electric vehicles, solar power, and semiconductors. This should raise costs for all countries as companies within these value chains need to invest domestically to maintain reliable supply.”
He added:
“It gets worse if retaliatory tariffs and other industrial actions start to escalate. Isolated players, like perhaps the UK, might paradoxically benefit, however, as overcapacity in certain places, mostly China, might lead to excess supply for certain materials like nickel or components like semiconductors.”
O’Marah further explained the potential for overcapacity suppliers, such as Chinese manufacturers, to dump products in third-party countries at lower prices, which could assist some industries but harm domestic suppliers of those same materials.
He concluded that Trump’s proposed tariffs might unintentionally encourage a shift toward more localized or regionalized supply chains, offering the dual benefits of greater resilience and a reduced carbon footprint.
“The benefit of this shift is to provide more resilient but also lower carbon footprint supply chains all around the world, rather than sourcing globally and shipping tens of thousands of miles, as has been the norm for 30 years of US/China-led globalization,” he said.
