U.S.-China Trade War Pushed Global Supply Chains to the Edge, New Data Reveals

The U.S.-China trade truce offers brief relief, but GEP’s latest data shows supply chain volatility is rising. From stockpiling in North America to shrinking demand in Asia, global manufacturing is being reshaped.

A Temporary Truce in the Midst of Chaos

When the U.S. and China reached a temporary agreement to pause new tariffs, it gave global manufacturers a glimmer of hope. But beneath that surface calm, the storm continues to brew.

According to John Piatek, VP of Consulting at GEP, the pressure hasn’t really let up.

“Manufacturing demand in China is dropping fast, while U.S. companies are rushing to stockpile critical materials to hedge against uncertainty,” he said.

GEP Index Highlights Global Supply Chain Stress

The GEP Global Supply Chain Volatility Index, based on monthly surveys of 27,000 businesses, reveals worrying signs:

Rising inventories

Soaring transport costs

Ongoing shortages

Growing backlogs

It’s clear that the first waves of the U.S.-China tariff conflict have already hit global manufacturing, and the 90-day tariff pause might not be enough to prevent a deeper rupture.

North America & Asia: A Tale of Two Responses

In April, data showed a dramatic spike in inventory levels across North American companies — described as a “hockey stick” surge — as firms scrambled to hoard materials.

In contrast, Asian manufacturers reported their weakest purchasing activity since December 2023, signaling concerns about slowing demand and looming supply gaps.

“What we’re seeing is the supply chain buckling under pressure, and companies bracing for what may come next,” said Piatek.

A Glimmer of Optimism in Europe

While Asia and North America face turbulence, Europe is showing cautious signs of recovery.

Germany and France are seeing better utilization of manufacturing capacity after months of underperformance.

However, the UK, despite being the first country to sign a preliminary trade deal with the U.S., still reports record-low supplier activity.

But GEP warns that any further global trade shocks could easily reverse Europe’s fragile recovery.

Asia’s Overcapacity: A Sign of the Times

Data from April also highlights increasing spare capacity across supply chains in Asia, particularly in China, Taiwan, and South Korea. That shift points to slowing global demand and declining export activity — a red flag for economies built on manufacturing.

The Quiet Shift: Supply Chains Are Moving

According to Stephen Edwards, CEO of the Port of Virginia, supply chains are already beginning to move — away from China and toward Southeast Asia, South Asia, and Europe.

“Our fastest growth in the past four years has come from India, Vietnam, and Europe,” Edwards said in a CNBC interview.

While China remains the port’s second-largest trade partner, volume has remained flat — even as other regions surge.

Conclusion: The Future of Global Trade Is Multipolar

The U.S.-China trade war has exposed just how vulnerable global supply chains can be. Even with a temporary truce, companies are no longer waiting — they’re actively diversifying suppliers, reassessing risk, and shifting sourcing strategies.

As the trade landscape evolves, the global supply chain is no longer centered around one dominant player. Instead, we’re entering an era where resilience, regional balance, and flexibility are the new priorities.

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Source: CNBC