Question

How would the changes in transportation costs, tariff, exchange rates affect global supply chain?

Answer 1

Tariffs are duties that are paid for the transportation of gods across the borders. The higher the tariffs, the businesses will avoid transporting goods across the borders. Due to currency fluctuations, it is advisable to shift production to the are where the currency is weak. This makes production cheaper . The companies who have a flexible production facility can shift to areas depending upon the buying power of the population, and shift production to cheaper areas where there is diminished currency and make goods inexpensive for the population. As the transportation costs increases, transporting goods over longer distances becomes expensive ,which ultimately adds to the price of a product. Higher transportation costs discourage producers form transporting their goods over long distances.