In the space of a single week in July, the U.S. government published new “Brazil 301” and “Forced Labor 301” tariff schedules. By the time my team finished parsing the actions that covered the top 60 U.S. trading partners, representing 99.4% of U.S. imports, mapping every carve-out, and cross-referencing the exemption appendices, the update required generating 11,000 distinct compliance rules. 

Read also: Tariff Refunds, Economic Uncertainty, and What’s Ahead

Not 11,000 line items. 11,000 rules, each governing a specific commodity from a specific country, imported on a specific date, to determine the chapter 99 codes and associated duty impact once the product gets admitted to the zone.

Every FTZ program in the country was required to absorb that same update. The ones running systems that handle this automatically didn’t notice. The ones doing it by hand are still catching up.  

This is the environment FTZ programs are operating in right now. And new research from Dimensional Research, based on a survey of 301 VP and C-level executives in trade compliance, supply chain, and operations, shows that most of the software managing these programs was not built for this level of change.

The Numbers Are Specific Enough to Be Uncomfortable

Only 20% of respondents say their FTZ software automatically updates when tariff schedules change. That means 80% of organizations managing active zones right now are updating tariff rules by hand, zone by zone, system by system, in a regulatory environment where the schedules can shift without notice and the window between a change and a compliance failure is not forgiving. Ninety-seven percent are running their FTZ operations across three or more disconnected software applications. Spreadsheets, ERP modules, dedicated FTZ tools, custom-built workarounds. Each system is holding a piece of the compliance picture, but none are holding all of it.

I have spent 20 years in this space, and what surprises me about these numbers is not that they’re high, it’s that they’re consistent. The patchwork architecture these programs are running on was not the result of bad decisions. It was assembled over time, zone by zone, as programs grew, as requirements changed, as new regulatory obligations got bolted onto existing infrastructure. The workarounds accumulated but softwaree didn’t adapt. For a long time, the pace of change in the trade environment was slow enough that the gap between what the software could do and what the programs needed didn’t create an acute crisis. It just created friction.

That friction has become something else entirely. When tariff schedules change as frequently as they have over the past two years, the reconciliation lag in a manual update cycle isn’t a minor inefficiency. It causes entries to get rejected leaving importers unable to file. Where penalty exposure accumulates across active shipments. Where a compliance team or finance is working off duty calculations that stopped reflecting reality three weeks ago and won’t know it until the next reconciliation cycle closes.

What the Report Data Actually Shows

The report data in the Dimensional Research survey puts a number to what that friction costs. 67% of respondents experienced FTZ audits with negative findings in the last 11 months. Not over five years, not historically — in the last 11 months. When they were asked what caused those findings, FTZ management software ranked as the leading cause. Not process failures or staffing. Software.

The consequences are severe. Among the executives who experienced negative audit findings: 34% received a minor financial penalty, 27% a major financial penalty, 25% faced operational sanctions, and 23% had to close an FTZ entirely. Site deactivation is worth pausing on. It isn’t a corrective action that resolves after remediation. Deactivating means surrendering every financial benefit the program was generating — duty deferral, cash flow timing, working capital advantages — and CBP won’t approve the deactivation until all merchandise in zone status has been cleared out, which generally means paying duty on inventory that had been sitting deferred. Reactivation is possible, but it happens under the scrutiny that follows an adverse finding.

The timing matters because FTZ programs are not contracting. They’re growing. The same survey found that 98% of companies using FTZs are now running multiple zones, and five of the top seven business changes executives report making in response to tariff volatility involve FTZ utilization. 

Companies are leaning into FTZs precisely because the duty economics make sense — deferral, reduction, elimination — and the programs are expanding to capture more of those advantages. The problem is that the software managing the expanded programs is largely the same software that managed the existing programs, and it wasn’t keeping up with those either.

AI Won’t Fix a Foundation That Isn’t There

Somewhere in the middle of this, 99% of the executives in the survey said they are using or planning to use AI to manage FTZ operations. I understand the appeal. The top intended use cases are compliance checks, document ingestion, and product classification — exactly the tasks that are most painful to do manually and most prone to error under time pressure. But there’s a sequencing question here that I think gets glossed over in most conversations about AI in trade compliance.

Unfortunately for trade, the government does not provide a single exhaustive data feed of all HTS codes and tie them to all applicable additional tariffs and other related information. CSMS alerts — the text-based notifications Customs uses to announce changes — are dense, technical, and full of carve-outs that only apply under specific combinations of origin country, product classification, import date, and export date. The appendices that cover the exceptions come as PDFs. 

None of it arrives in a format that plugs cleanly into a system. What makes the 11,000-rule update possible at all is a layer of infrastructure that monitors these sources continuously, parses them, and translates them into system-enforced rules before a shipment receipt ever arrives. AI applied to that process, when the underlying data is clean and structured and current, can meaningfully accelerate classification, catch anomalies, and reduce manual review time.

AI applied to a program where tariff rules are updated manually, where compliance documentation gets assembled before each audit rather than generated on demand, where inventory data consolidates on a reporting schedule rather than in real time — that’s a different situation. It helps process the gap faster, it doesn’t fix the gap.

The programs that will actually benefit from AI investment in FTZ operations are the ones that have already solved the foundation: automatic tariff updates, an intelligent tariff engine that helps with the chapter 99 assignment, real-time inventory visibility per zone, on-demand audit documentation. Not because those things are prerequisites in some theoretical sense, but because without them, the data AI is working with isn’t reliable enough to produce reliable outputs. The sequencing isn’t a technology preference. It’s an accuracy question.

The Platform That Got the Job Done in 2019 Is in a Different Environment Now

What I used to hear most often from compliance leaders evaluating their current platforms was some version of: “It’s not perfect, but it gets the job done.” That assessment was probably accurate when the rate of change was more manageable. The evaluation criteria that mattered when most of these platforms were selected — compliance reporting, documentation accuracy, CBP filing capability — are still relevant. But the environment has added requirements those platforms weren’t designed to meet. Automatic additional tariff assignment and calculation updates across all zones. Regulatory rule sets that can absorb an 11,000-rule update in a single push rather than a manual cycle. Audit documentation that’s available on demand rather than assembled over weeks. The platform that got the job done in 2019 is operating in a different trade environment now.

The Dimensional Research survey ends with a conclusion I’d put differently than a market research firm would, but I don’t disagree with it: FTZs are a critical strategy for managing tariff risk, but the software being used isn’t integrated and lacks key functionality. What I’d add is that the gap between FTZ program growth and FTZ software capability has probably never been wider, and tariff volatility is making the cost of that gap visible in ways it wasn’t before. The compliance teams working hardest right now are often the ones whose organizations have invested the most in FTZ strategy. The strategy is sound. The infrastructure running it needs to catch up.

Author Bio

Joshua Guy is VP of Global Trade Compliance at QAD, where he leads the company’s FTZ and global trade compliance product strategy. The Dimensional Research survey referenced in this article was commissioned by QAD, powered by AWS, and surveyed 301 VP and C-level executives in trade compliance, supply chain, and operations.

In 2024, four out of every five organizations experienced at least one significant supply chain disruption. The causes ranged from supplier failures and port congestion to geopolitical shifts and extreme weather — the latter of which is now accelerating, with climate-driven disruption events up 33% year-over-year and flood-related incidents specifically up 34%, according to Resilinc’s 2026 supply chain analysis. In dollar terms, the aggregate cost of supply chain disruptions reached approximately $184 billion annually by 2025, according to a study by global consulting firm J.S. Held cited by NetSuite.

Read also: How Artificial Intelligence Is Reshaping Global Supply Chains

Those numbers are large enough to demand a serious response. The majority of organizations have responded by investing in resilience technology: AI-driven forecasting platforms, advanced TMS integrations, digital twin modeling, and real-time risk dashboards. These are legitimate investments. But they share a foundational vulnerability that often goes unexamined: they are all downstream of the identification layer. And for most organizations, the identification layer is still running on infrastructure that was not designed to support resilience at the speed disruption now requires.

The Visibility Gap That Is Making Disruptions Worse

Resilience is a function of how fast an organization can detect a disruption and how much lead time it has to respond before the damage compounds. On both measures, most supply chains are underperforming.

A 2025 survey by QIMA found that only 13% of businesses report full visibility into their sourcing networks, including raw materials. A broader industry assessment from Emapta found the number even lower: only 6% of organizations report full end-to-end supply chain visibility. A 2026 survey of more than 200 supply chain leaders at mid-market manufacturers and distributors by Knosc found that 73% of respondents lack real-time visibility into their full supply chain — and that supply chain teams spend 28% of their total working time responding to disruptions, most of which is spent investigating what happened rather than fixing it.

That 28% figure is the operational cost of a visibility gap. When identification data is incomplete, delayed, or physically inaccessible, teams cannot confirm what is where, whether a shipment has been tampered with or rerouted, or which nodes in a network have been affected by a disruption event. The response window, which in a well-instrumented supply chain might be hours, stretches to days. In high-disruption environments, that difference is often the margin between a manageable reroute and a missed production schedule.

What Resilience Platforms Cannot Fix on Their Own

The dominant assumption in supply chain resilience investment is that better software produces better outcomes. The assumption is not wrong, but it is incomplete. According to the Prologis 2026 Supply Chain Outlook Report, the top disruption concerns for industry leaders are economic volatility (51%), trade barriers and tariffs (48%), geopolitical instability (38%), and cybersecurity threats (38%). These are real risks, and forecasting models that incorporate geopolitical signals, tariff scenario modeling, and supplier network risk scoring genuinely help organizations prepare for them.

But no forecasting model can substitute for knowing where a specific pallet is at a given moment, whether it contains what its documentation says it contains, and whether it has moved through the correct sequence of checkpoints in the correct order. That is physical-world data. It originates not in a platform but in the identification technology applied to the asset itself.

An analysis by The Supply Chain Xchange, published in July 2026, made this point plainly: visibility projects consistently deliver dashboards, but they rarely deliver the coordinated action that turns data into service levels improved or costs saved. The constraint is not the platform. It is the quality, currency, and granularity of identification data feeding the platform. When that data depends on manual barcode scans at periodic intervals, the platform’s real-time view is not real-time — it is a series of snapshots with significant gaps between them. During a disruption, those gaps are exactly where things go wrong.

How Smart Identification Changes the Disruption Response Window

The operational shift that RFID and other advanced identification technologies produce in disruption scenarios is not primarily about speed of scanning. It is about the continuity of data.

Traditional barcode systems generate a record when a scanner is pointed at a label. RFID-based systems generate a record every time a tagged asset passes through or near a reader — automatically, without manual intervention, at every checkpoint in the network. The difference, as Supply Chain Management Review described in its April 2026 coverage of UPS’s RFID network expansion, is the shift from periodic snapshots to always-on visibility. Tracking begins at label creation and initial pickup, giving operations teams a data trail that starts at the origin and continues unbroken through every transit and handoff event.

For disruption response specifically, this continuity matters in three concrete ways.

First, earlier detection. When a shipment deviates from its expected route or timing, an RFID-instrumented supply chain registers the anomaly at the first checkpoint it misses or unexpectedly passes through. A barcode-based system may not register the problem until the next scheduled manual scan, which could be hours or days later. Vendor portal research cited by Digital Applied found that suppliers sharing real-time identification data with buyers can reduce supply chain lead time variability by 20 to 35% — a direct function of the decision window that earlier detection creates.

Second, rerouting integrity. When a disruption forces a route change, assets need to be quickly verified at new transit points. RFID readers at those points can instantly confirm asset identity, condition data, and chain-of-custody sequence without requiring physical handling or line-of-sight access. As Lowry Solutions noted in a January 2026 analysis of RFID supply chain applications, sealed RFID tags also provide a tamper-evident function: they generate a signal if a shipment is opened or rerouted without authorization, each checkpoint creating a logged record with precise time and location. In high-disruption environments where rerouted freight passes through unfamiliar handlers, that authorization trail is not a compliance detail — it is a risk control.

Third, inventory clarity during recovery. When a disruption event clears and operations move into recovery mode, the key question is what is on hand, where, and in what condition. A network equipped with comprehensive smart labeling solutions — spanning RFID tags, data matrix codes, NFC-enabled assets, and QR-based tracking — provides recovery teams with a machine-readable inventory at every node in the network, rather than requiring physical counts or manual reconciliation before recovery operations can begin.

The Compounding Investment Case

Supply chain leaders have registered these realities in their investment priorities for 2026. In the Knosc survey of 200-plus supply chain leaders, 89% ranked real-time visibility into supplier status as their top investment priority for the year, ahead of automated disruption alerts (76%) and scenario analysis tools (72%). Separately, 82% of supply chain organizations reported increased IT spending in 2025, with a strong emphasis on visibility and automation infrastructure, according to data from Procurement Tactics.

The RFID Smart Labels market reflects this demand signal. It was valued at $7.37 billion in 2025 and is projected to reach $12.51 billion by 2032, growing at a compound annual growth rate of 7.83%, according to 360iResearch. TechTarget’s January 2026 analysis of RFID use cases in supply chain management noted the defining trend clearly: the value of RFID in the modern supply chain is increasingly defined not by the tags themselves but by the visibility and accountability they enable as inputs into broader decision-making systems — shaping how leaders assess risk, allocate capital, and respond to disruption across complex, multi-partner networks.

That framing represents a meaningful shift from how identification technology has historically been categorized. It is no longer a labeling function. It is a risk management function. And the data confirms a competitive divide is forming between organizations that have recognized this and those that have not. The Knosc research is direct on this point: companies with real-time supply chain visibility are operating in a measurably different performance league from those without it. The question for most organizations is not whether to close the identification gap. It is how much disruption they can afford while they wait.

Resilience Requires a Physical Foundation

The supply chain resilience conversation in 2026 is dominated by software, AI, and data platforms — and for good reason. These tools have genuine and growing value. But resilience is ultimately a physical problem before it is a data problem. Products move through physical space, through hands and vehicles and facilities, and the accuracy of every digital system that tracks them depends on the accuracy of the identification applied at the physical layer.

A label that a disrupted supply chain cannot read is a blind spot. A shipment that cannot be instantly verified at a rerouted checkpoint is a delay. An inventory count that requires manual reconciliation before recovery operations can start is a compounding loss. Smart identification technology addresses all three not by replacing resilience platforms, but by giving those platforms the data quality they need to function as intended.

In an era where 41% of high-tech supply chain professionals identify geopolitical volatility and export controls as their greatest risk concern for the coming year — and where 73% of supply chain leaders still lack real-time network visibility — the identification layer is where resilience investments generate their highest leverage. The label is not the last thing to upgrade. In many organizations, it should be the first.

References

1. Resilinc — “Supply Chain Disruption Is Accelerating and Why 2026 Demands a New Response” (May 2026) https://resilinc.ai/blog/supply-chain-disruption-accelerating-why-2026-demands-new-response/
2. NetSuite — “The Top 10 Supply Chain Risks of 2026 and How to Mitigate Them” https://www.netsuite.com/portal/resource/articles/inventory-management/supply-chain-risks.shtml
3. QIMA — 2025 Research on supply chain sourcing network visibility, cited via Nexdriver https://www.nexdriver.com/nexpertise/freight-visibility-issues
4. Emapta — “20+ Supply Chain Statistics and Trends for 2026” (April 2026) https://emapta.com/blog/supply-chain-statistics/
5. Knosc — “The State of Supply Chain Visibility in 2026” (survey of 200+ supply chain leaders) https://knosc.com/blog/state-supply-chain-visibility-2026
6. Prologis — 2026 Supply Chain Outlook Report, cited via Agistix https://www.agistix.com/resources/blog/supply-chain-disruptions-2026-faqs-on-managing-modern-risks/
7. The Supply Chain Xchange — “The Visibility Illusion: Why More Data Does Not Always Mean Better Supply Chains” (July 2026) https://www.thescxchange.com/tech-infrastructure/technology/the-visibility-illusion-why-more-data-does-not-always-mean-better-supply-chains
8. Supply Chain Management Review — “UPS RFID Rollout Signals Next Phase of Supply Chain Visibility” (April 2026) https://www.scmr.com/article/ups-rfid-rollout-signals-next-phase-of-supply-chain-visibility
9. Digital Applied — “Supply Chain Digital Visibility: Tracking Guide 2026” (January 2026) https://www.digitalapplied.com/blog/supply-chain-digital-visibility-tracking-guide-2026
10. Lowry Solutions — “Future of Supply Chains: RFID Leads the Way” (January 2026) https://lowrysolutions.com/blog/the-future-of-supply-chain-automation-why-rfid-is-leading-the-way/
11. TechTarget — “6 Examples of RFID Supply Chain Use Cases” (updated January 2026) https://www.techtarget.com/searcherp/feature/RFID-in-supply-chain-6-examples-in-use-today
12. 360iResearch — “RFID Smart Labels Market Size and Share 2026–2032” (February 2026) https://www.360iresearch.com/library/intelligence/rfid-smart-labels
13. Tradeverifyd — “79 Supply Chain Statistics to Know in 2026” (May 2026) https://tradeverifyd.com/resources/supply-chain-statistics
14. Procurement Tactics — “Supply Chain Statistics: 70 Key Figures of 2026” (December 2025) https://procurementtactics.com/supply-chain-statistics/
15. BradyID.com — “Smart Labeling Solutions: Beyond Barcodes” https://www.bradyid.com/resources/smart-labeling-solutions

An international order rarely begins inside a mature, fully integrated digital platform.

Read also: How Artificial Intelligence Is Reshaping Global Supply Chains

It may start with a conversation at a trade show, continue through WeChat or email, and move into an Excel quotation. Technical drawings, sample approvals, contracts, production photographs, inspection reports, export documents, and payment records accumulate afterward.

Every document may be correct. Every participant may be experienced. The project can still fail.

The problem is often not a lack of information. It is the absence of reliable connections among information, decisions, evidence, and responsibility.

Who approved the final specification? Which drawing revision was formally released to production? Was the supplier’s actual legal entity verified before payment? Did the buyer approve the material change? Was the quality problem corrected, or did it merely disappear inside a message thread?

The real digital transformation of international trade begins with questions like these.

Global trade will not be fundamentally transformed simply because companies use artificial intelligence to write emails, translate documents, or generate reports. Those applications are useful, but they improve only the surface layer of efficiency.

The deeper change will come from intelligent operating systems that connect suppliers, products, approvals, contracts, production, quality control, export documentation, and financial obligations within one traceable process.

AI can be the engine. Process control is the vehicle.

From Finding Suppliers to Controlling Execution

For many years, access to supplier information was a core competitive advantage for sourcing companies. That advantage has changed.

Digital platforms now allow almost any international buyer to identify hundreds of prospective manufacturers within hours. Company profiles, product catalogs, factory videos, and indicative prices are widely available.

But finding a supplier is not the same as validating one.

A website does not prove manufacturing capability. A business license does not prove that the company can produce a particular technical product. A successful sample does not guarantee stable mass production. A competitive quotation does not prove that the supplier understands every requirement.

The central challenge of procurement has shifted from supplier discovery to supplier and project execution.

Modern sourcing requires a connected chain of decisions. The supplier’s legal entity and commercial identity must be verified, and its technical and production capability assessed. Quotations must be compared under a common standard, and product specifications and commercial margins formally approved. From there, contract execution has to be controlled, production milestones tracked, quality failures recorded together with their corrective actions, export and compliance documents confirmed, and payments and financial deadlines monitored.

If those steps remain scattered across spreadsheets, chat applications, individual memories, and disconnected software, management may possess large volumes of information without possessing real control.

International Trade Produces Data, but Not Necessarily Visibility

International trade generates enormous quantities of data every day. Much of it is unstructured.

A project manager may know the true order status because she remembers a conversation with the supplier. An inspector may know that a defect was corrected because he saw the new batch. A salesperson may understand a price change because the customer approved it during a call.

The individuals know. The organization may not.

When operational memory lives primarily inside people’s heads, chat histories, and dispersed files, the company becomes dependent on personal recollection. As project volume grows, management blind spots grow with it.

Digitization cannot therefore mean only converting paper documents into electronic files. A PDF stored on a server is digital, but it does not necessarily belong to a digital process.

True operational digitization connects every document to a project, every project to accountable people, every approval to a defined decision, and every decision to its evidence.

The goal is not to generate more data. It is to create a reliable chain of evidence.

AI Creates Value Only When It Is Embedded in the Workflow

The World Trade Organization has argued that AI can reduce trade costs, increase productivity, and reshape how goods and services are produced and exchanged. Its 2025 World Trade Report estimated that, under the scenarios it modeled, AI could increase global trade by approximately 34% to 37% by 2040.

That potential is enormous. But AI’s value in international trade depends on where it is applied.

A stand-alone chatbot can answer a question. An operational AI system must know which project the answer belongs to, what action should follow, what evidence is required, and who has authority to approve the result.

Used properly, AI can extract structured information from business licenses, quotations, and inspection reports, and detect data that is missing or contradictory. It can compare suppliers against predefined criteria and identify unusual changes in price, specifications, or bank details. It can generate technical clarification questions, flag delayed milestones, summarize a project’s history, surface quality issues that remain open, and prioritize the orders that genuinely require human intervention.

The OECD has similarly noted that AI can enhance supply-chain transparency, traceability, and risk management when it is embedded in digital, interoperable systems. Paperless trade, standardized data, and system connectivity are what allow these capabilities to extend beyond one software tool and into the wider trade chain.

The distinction is critical.

AI without process constraints may only generate answers faster. Process without AI can create excessive administrative work. Together, they can create disciplined execution.

Dongguan Can Become a Laboratory for Intelligent Trade

This transformation is especially relevant to Dongguan.

Dongguan is one of China’s most important manufacturing and foreign-trade cities. In 2025, its total foreign trade reached RMB 1.58 trillion, an increase of 13.8% year over year, returning the city to fifth place nationally.

At the same time, Dongguan has established 183 smart factories or smart workshops and pushed nearly 10,000 above-designated-size industrial enterprises to undertake digital transformation.

These figures reveal a deeper change. Dongguan can no longer be defined only by its manufacturing scale. It is developing the digital infrastructure, producer services, and intelligent management systems surrounding production.

Factories are becoming smarter. Logistics networks are becoming more connected. Quality management is becoming more data-driven. The next step is to digitize the commercial collaboration and project execution connecting Chinese manufacturers with international buyers.

That requires technology, but it also requires practical knowledge of how international projects move among factories, procurement departments, inspection teams, exporters, and customer organizations.

Software built without operational experience may record transactions while missing the exact points at which risk is created.

Building an Operating System Upward From the Factory Floor

At SHAMANA, a foreign-invested sourcing and supply-chain engineering company based in Dongguan, we repeatedly encountered the same operational problem.

After years of coordinating projects between Chinese manufacturers and international customers, we realized that access to information was no longer the primary limitation. The real constraint was converting thousands of fragments of information into a controlled sequence of decisions.

We therefore began developing the SHAMANA Intelligent Sourcing System, or SISS, as internal operating infrastructure connecting the principal stages of an international procurement project.

The system links supplier profiles, legal verification, commercial assessment, quotations, approval gates, contracts, production execution, quality control, export documents, and financial monitoring. AI assists with document extraction, supplier analysis, risk detection, and data validation.

But important decisions remain assigned to accountable people.

A legal-risk warning cannot disappear merely because an algorithm produces a high score. A product cannot enter production before the required approvals have been completed. A quality failure cannot be closed without evidence of corrective action.

The purpose is not to remove people from the process. It is to stop the entire process from depending on what people happen to remember.

Human Judgment Must Remain Inside the System

International trade involves cultural understanding, technical judgment, negotiation, and physical verification.

An AI model cannot walk through a factory and understand every production detail. It cannot assume contractual liability. Without human context, it may not distinguish between a supplier explanation that is technically reasonable and one that is merely convenient.

The most reliable model for AI in international trade is therefore human-in-the-loop.

AI reads, organizes, compares, and flags. The system enforces workflow rules. Specialists investigate and judge. Managers approve. Auditors can later reconstruct how and why a decision was made.

This model also addresses one of the most serious risks created by rapid AI adoption: a system may sound highly confident while having no operational accountability.

Companies should not ask only, “What did the AI recommend?” They should ask which information supported the recommendation, which rule the system applied, who reviewed the result, who approved the project’s movement to the next stage, and whether the complete decision could be reconstructed six months later.

Responsible AI should strengthen accountability, not blur it.

Traceability Creates Value for Buyers and Factories

Traceability is sometimes described as a burden placed on suppliers. A well-designed traceability system protects both sides of a transaction.

For the international buyer, it provides visibility into project status, approved specifications, quality results, and commercial obligations. For the Chinese factory, it records what the customer requested, what the customer approved, and when the requirements changed.

Many commercial disputes do not begin with deliberate deception. They begin with ambiguity.

A drawing is updated but not distributed to every participant. A packaging change is verbally approved but never formally recorded. A buyer assumes that a certificate covers a particular product variant. A supplier and an inspector interpret an unclear tolerance differently.

A traceable system cannot eliminate every disagreement. It can reduce the space in which disagreement grows.

In this sense, traceability is becoming a new currency of trust in global trade. Trust still comes from human relationships, but increasingly it will be supported by evidence.

From “Made in China” to “Intelligently Managed in China”

China’s manufacturing strength was built on industrial scale, supply-chain density, infrastructure, and continuous improvement. The next stage of international competitiveness may depend on connecting that capability with digital services, compliance management, quality data, and intelligent project execution.

This will create room for a new generation of producer-service companies. Their role will extend beyond introducing factories or arranging isolated inspections. They will become operational integrators between manufacturing capability and international-market requirements.

For Chinese manufacturers, these systems can make cooperation with overseas customers clearer and more efficient. For international buyers, they can provide continuous visibility without requiring every overseas company to build a complete local operation in China. For manufacturing cities such as Dongguan, they can extend industrial strength into higher-value services, software, and supply-chain intelligence.

AI’s Value Is Not Fewer People. It Is Fewer Blind Spots.

The debate about artificial intelligence often begins with a question: How many jobs will it replace?

In international trade, a more practical question is: How many operational blind spots can it remove?

Can it detect that the beneficiary of a payment account does not match the contracted supplier? Can it identify that a new quotation specifies a different material? Can it find an inspection report with no corresponding corrective-action record? Can it stop an order from proceeding without a mandatory approval? Can it show management which projects face delivery, quality, compliance, or financial risk?

These are not distant, theoretical applications. They are answers to management problems encountered every day by thousands of trading and manufacturing companies.

The next generation of international trade will not emerge because companies add a chatbot to an old process. It will emerge when they redesign the process so that information, decisions, evidence, and responsibility move together.

The future is not trade without people.

It is trade in which risk has fewer places to hide.

Author Bio

Radu Hanu is the founder and CEO of SHAMANA Sourcing (shamana-china.com), an engineering-led sourcing and supply-chain execution company established in Dongguan, China, in 2017. He has worked within China’s sourcing and manufacturing ecosystem since 2011, coordinating international procurement, manufacturing, quality-control, and export projects between Chinese suppliers and overseas markets. He leads the development of the SHAMANA Intelligent Sourcing System (SISS), an internal platform for supplier verification, process control, project management, and decision traceability.

The Trump administration has returned over $100 billion to U.S. businesses and importers that paid its global tariffs, and the funds are already stimulating economic activity. According to a Wall Street Journal tally, 40 S&P 500 companies have recorded $9.6 billion in refunds, with Apple alone reporting nearly $2.2 billion. Other major recipients include Nike, FedEx, Amazon, and General Motors.

Read also: Tariff Refunds, Economic Uncertainty, and What’s Ahead

Apollo Chief Economist Torsten Slok noted that tariff refunds are boosting both corporate earnings and GDP growth. He estimated the refunds will contribute about 0.2 percentage point to third-quarter GDP growth, which the Atlanta Fed tracks at 4.3%. This marks a sharp acceleration from the second quarter’s 1.5% gain, which was skewed by high AI-related imports, and the first quarter’s 2.1%.

In the current quarter, tariff refunds are combining with other positive factors such as the ongoing AI spending boom, tax cuts from the One Big Beautiful Bill Act, and the reshoring of U.S. manufacturing. Slok added that the U.S. economy continues to be supported by a growing set of tailwinds.

The surprisingly weak July jobs report does not signal a loss of momentum, according to Slok, who attributed sharp drops in government payrolls and hospitality employment to seasonal adjustment quirks. Excluding those sectors, the economy would have added 70,000 jobs, in line with Wall Street’s consensus, instead of losing 23,000. Additionally, jobless claims have hovered around 200,000 per week, and job openings have been rising over the past six months.

Slok concluded that the market is underestimating how strong growth is right now, and as a result, rates will stay higher for longer. The refunds so far represent about 60% of the $166 billion collected under the International Emergency Economic Powers Act, which the Supreme Court struck down in February.

Some U.S. consumers are filing lawsuits against companies to demand a share of the refunds, while firms such as Amazon, FedEx, and UPS have vowed to return the funds to customers. Earlier this month, Bank of America analysts noted that retailers are using the returned money to fund promotions and offset freight and other supply-chain costs.

Source: IndexBox Market Intelligence Platform  

Traffic through the Strait of Hormuz nearly came to a standstill over the weekend following attacks on tankers, highlighting the mounting threats to one of the world’s most critical energy corridors, even as crude prices remained largely unchanged amid the absence of headway in US-Iran negotiations.

Read also: ITC: Strait of Hormuz Disruptions Weigh on Global Trade

Ship-tracking data from Kpler showed only five commodity vessels passed through the strategic waterway on Saturday, with none recorded on Sunday, versus 31 during the prior weekend. The steep drop came after assaults on ships operated by Abu Dhabi National Oil Company (ADNOC), intensifying worries among vessel owners about the perils of transiting the strait.

The sparse traffic also underscored the increasingly tough circumstances for shipping. Among the ships entering the strait on Saturday was an empty very large crude carrier with its automatic identification system turned off, while an Indian-flagged very large gas carrier took a path through Iranian waters. A small tanker hauling Iranian fuel oil was also observed leaving the waterway.

The weekend numbers mark a stark departure from typical activity. Prior to the conflict, more than 130 vessels daily were said to traverse the strait, which carries about a fifth of global oil and LNG supplies.

The reduction followed the UAE’s announcement that ADNOC-operated ships had been targeted while moving through the waterway. These incidents have amplified fears that commercial fleets may grow increasingly hesitant to rely on the strait, even where passage remains feasible.

The shipping slowdown is unfolding against a diplomatic landscape offering scant hope for a swift return to normal operations. US-Iran discussions aimed at ending the conflict and ensuring the strait’s reopening have faltered, with Tehran insisting Washington meet its demands before unrestricted maritime movement can restart. Iran has also challenged the US portrayal of events, asserting that any navigation accord must be tied to broader conflict-related issues.

Washington, for its part, has indicated readiness for a drawn-out standoff. US Defence Secretary Pete Hegseth stated the United States could sustain its naval blockade of Iran indefinitely, while the Trump administration has pledged additional economic measures against Tehran.

These opposing stances have left the strait’s near-term outlook in doubt. No clear signs point to an imminent resumption of regular commercial traffic, and ongoing attacks are making even those vessels willing to navigate the waterway more wary.

The disruption extends beyond Hormuz. At the Bab el-Mandeb, the southern entrance to the Red Sea, Kpler logged 49 weekend transits by commodity vessels, a drop from 55 the prior weekend. No Saudi oil shipments were detected moving through that route. This decline follows a Houthi announcement of a naval blockade against Saudi Arabia, adding further risk to regional energy and trade shipping.

The combined disruptions at both ends of the Gulf-Red Sea shipping corridor are fueling concerns about longer transit times, rising insurance premiums, and added strain on alternative pathways.

Despite the sharp fall in Hormuz traffic, oil prices held relatively firm in early Asian trading on Monday. Brent crude futures hovered near $88.72 per barrel, up roughly 0.2%, while US West Texas Intermediate stood around $82.35, slightly lower.

The subdued market reaction is striking given the severity of the disruption. Investors seem to weigh the geopolitical peril against weak demand prospects, ample stockpiles, and the chance that some supplies can still move via alternate routes or methods. Recent oil-market assessments have cited softer consumption and relatively full inventories as reasons for the limited immediate price impact.

Source: IndexBox Market Intelligence Platform  

Introduction

In today’s interconnected world, global supply chains form the backbone of international trade and commerce. From raw materials to finished goods, production networks stretch across continents, linking manufacturers, suppliers, and consumers. However, over the past few years, the stability of these networks has been repeatedly tested by geopolitical tensions, trade wars, pandemics, and shifting regulatory landscapes. Events such as the U.S.-China trade dispute, the Russia-Ukraine conflict, and rising protectionism have exposed deep vulnerabilities in traditional supply chain models.

Read also: AI and Predictive Analytics in Global Supply Chain Resilience

As a result, building supply chain resilience has become a strategic priority for businesses worldwide. In this new era of uncertainty, flexibility, adaptability, and risk mitigation are more valuable than ever. Companies are rethinking their operations to create networks capable of withstanding shocks while maintaining efficiency and global competitiveness.

Understanding Supply Chain Resilience

Supply chain resilience refers to the ability of a supply network to anticipate, absorb, recover from, and adapt to disruptions without major operational or financial losses. Unlike efficiency-driven models that focus solely on cost reduction and lean operations, resilient supply chains prioritize continuity, diversification, and agility.

The old “just-in-time” approach, which minimized inventory to cut costs, is being replaced by more flexible strategies that balance efficiency with preparedness. Organizations are realizing that resilience is not about avoiding disruption altogether but about being able to respond and recover faster than competitors.

This shift represents a fundamental transformation in global supply chain management, one that acknowledges uncertainty as a constant rather than an exception.

The Geopolitical Challenge to Supply Chain Stability

Geopolitical risks are among the most significant threats to global supply chains today. Sanctions, export bans, trade tariffs, and political conflicts can disrupt access to essential raw materials or markets overnight. For instance, semiconductor shortages caused by regional tensions have affected industries from automotive manufacturing to consumer electronics. Similarly, energy supply constraints resulting from geopolitical conflicts have influenced production costs and logistics globally.

Moreover, the rise of economic nationalism and the push for regional self-reliance are reshaping trade routes and supply chain configurations. Countries are increasingly emphasizing domestic production and “friend-shoring” sourcing from politically aligned or stable regions as a way to mitigate risk.

For global businesses, these developments mean that supply chain strategies must now incorporate political and regulatory forecasting alongside traditional risk management.

Diversification: The Key to Flexibility

One of the most effective strategies for building resilient supply chains is diversification of suppliers, manufacturing locations, and logistics channels. Relying heavily on a single supplier or region, even if cost-effective, exposes companies to high levels of risk.

Businesses are now moving away from over-dependence on any one geography, such as China, and adopting a “China-plus-one” strategy by establishing operations in countries like Vietnam, India, or Mexico. This diversification not only spreads risk but also offers access to new markets and cost structures.

Additionally, creating multiple sourcing channels ensures continuity of production during regional disruptions. Strategic inventory management and decentralized production hubs also allow companies to maintain operational flow without severe bottlenecks.

Digital Transformation and Predictive Capabilities

Technology plays a crucial role in enhancing supply chain resilience. Digital tools powered by artificial intelligence (AI), machine learning, and data analytics enable companies to gain real-time visibility into their networks and identify potential disruptions early.

Predictive analytics can forecast supply shortages, transportation delays, or geopolitical risks, allowing companies to take preventive actions. For example, digital twins, virtual models of supply chains help simulate “what-if” scenarios, enabling better decision-making under stress.

Blockchain technology is also improving transparency and trust within supply networks by providing immutable records of transactions and shipments. Combined with the Internet of Things (IoT), these tools make it easier to track goods, verify compliance, and ensure faster recovery from unexpected events.

By integrating digital transformation into operations, companies can move from reactive crisis management to proactive risk mitigation.

Collaboration and Strategic Partnerships

No company can achieve resilience alone. The interconnected nature of modern supply chains demands collaboration among stakeholders from suppliers and manufacturers to logistics providers and governments. Building long-term partnerships with reliable suppliers fosters mutual trust, information sharing, and joint risk assessment.

Public-private collaboration is equally important. Governments around the world are introducing policies and incentives to encourage the localization of critical industries, strengthen logistics infrastructure, and ensure energy security. Businesses that align with these initiatives can gain strategic advantages while contributing to more stable trade networks.

Moreover, participation in regional trade frameworks and digital trade corridors helps companies reduce dependency on volatile global routes. Collaborative ecosystems not only strengthen resilience but also promote sustainability and innovation in global logistics.

Balancing Efficiency with Resilience

While building flexible supply chains is essential, companies must also balance resilience with operational efficiency. Maintaining excess inventory or multiple suppliers can increase costs, so businesses need to use data-driven strategies to find the optimal equilibrium.

Resilience should be viewed as a strategic investment rather than an expense. Companies that manage to integrate flexibility without compromising competitiveness will be better equipped to seize opportunities when disruptions occur. In fact, resilient organizations often recover faster and capture market share left behind by less-prepared competitors.

Redefining Supply Chain Strategy for the Future

As geopolitical uncertainties continue to reshape the global trade landscape, supply chain resilience is emerging as a defining factor for business survival and success. The future of supply chains will depend on agility, digital innovation, and strategic diversification.

Companies that build flexible networks, capable of adapting to political shifts, economic shocks, and technological disruption will not only withstand crises but thrive in them. The age of geopolitical risk demands a new mindset: one where resilience is not a response to crisis, but a core element of business strategy.

In this new global order, resilient supply chains are no longer a competitive advantage but they are an essential foundation for sustainable growth.