Published 04 March 2025
Trump 2.0 heralds a keen focus on supply chain security, one intertwined with national security and drive to decouple critical supply chains from China. Businesses have embraced the imperative of supply chain security, but the gaps in their ability to fully do so have also become increasingly obvious. Cyberthreats and US-China tensions cloud their progress. Here are five ways the Trump administration can help.
On his birthday in December 2020, Sudhakar Ramakrishna, the newly minted chief executive officer of SolarWinds, a software company in Tulsa, Okla., got a call from the company’s general counsel that SolarWinds had suffered a devastating cyberattack. The attack, believed to be orchestrated by the Russian Foreign Intelligence Service, targeted SolarWinds’ Orion software and triggered a much larger supply chain incident affecting the data, networks and systems of thousands the company’s Fortune 500 clients and government agencies, from the US Homeland Security Department to the US Treasury Department and the European Parliament.
SolarWinds made it through "the Pearl Harbor of American IT." But the sense of vulnerability remained, in many guises: within lead companies and supply chain partners, software, logistics, and payments between them, and external forces like trade wars, clogged shipping lanes, natural disasters, and cybersecurity attacks like the one SolarWinds faced.
Under the first Trump administration, supply chain security became keenly intertwined with national security. The focus was driven by a number of concerns – the Covid backlogs in factories and ports, dependency on imported critical raw materials, and, most of all, American adversaries’ access to sensitive technologies. The Biden administration’s 100-day review identified vulnerabilities in key areas such as semiconductors, large-capacity batteries, critical minerals, and pharmaceutical ingredients. This led to domestic initiatives such as the CHIPS and Science Act, and international partnerships such as the Indo-Pacific Economic Framework for Prosperity (IPEF) Supply Chain Council.
Download How should Trump 2.0 secure global supply chains? by Kati Suominen:
The baseline of supply chain security in Trump 2.0 has changed from Trump 1.0. Til this day, Trump has yet to revoke any of Biden’s executive orders on supply chain security, which allowed an infrastructure of rules to remain in place, guiding the actions of federal agencies and businesses. Firms have embraced a "Zero Trust" cybersecurity framework of "never trust, always verify," and put in place contingency plans, adopted new technologies, and diversified their suppliers to hedge against supply chain disruptions. Companies have nearshored; Mexico replaced China as the main source of US imports in 2023, driven by industries and niches marked by high trade costs and deep preferential treatment under US-Mexico-Canada Agreement (USMCA) and the Dominican Republic-Central America-United States Free Trade Agreement (DR-CAFTA). Lower-tier suppliers have become better at protecting supply chains to meet the requirements of larger partners. Private and public demand for traceability has risen. And technologies pertinent to securing supply chains while boosting productivity, such as artificial intelligence and 3D printing, are changing.
However, supply chain security remains a huge challenge for firms and governments globally. Manufacturers report grappling with critical network security issues, including visibility gaps, resource shortages, and growing cyberthreats. Many small businesses are still in early stages of amassing the requisite granular data to improve their supply chain traceability. In addition, data localization and the fragmented landscape of data transfer rules place stop signs on digital highways and rupture massive data that help detect anomalies, for example in tracking payment fraud.
Against this backdrop and assuming that Trump would axe IPEF, there are five areas the next supply chain security initiatives could focus on, in the Asia-Pacific:
- A regional AI sandbox where startups and companies could test innovative AI applications for securing supply chains in a controlled environment, and regulators could together consider standards and rules that might need to be adopted.
- A Trusted Supplier Program that scales ongoing supplier capacity-building efforts with vetted SMEs, in partnership with large lead firms and banks and payment companies.
- Digitize handshakes and payments in logistics and remove paper-based trade documents that cloud visibility into trade transactions and clog customs.
- Research and development of the 6G wireless communication system to spur and secure the next revolution in supply chains, Industry 6.0 of connected factories, and predictive production.
- A new CPTPP with US involvement to promote common standards on AI, cybersecurity, data, and other digital rules, working in parallel with the IPEF Supply Chain Agreement.
With geopolitical tensions between the US and China escalating, Trump 2.0 is poised to drive further decoupling and reshoring of critical supply chains. But production remains globalized, China looms large in Asia-Pacific trade, and supply chain security is still an aspiration not a reality. The Trump administration and US allies in the Asia-Pacific can take the existing vast set of supply initiatives to the next level by leveraging technology, secure supplier programs, and common digital trade rules.
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Author
Kati Suominen
Kati Suominen is a Research Fellow at the Hinrich Foundation. She is the Founder and CEO of Nextrade Group that helps governments, multilateral development banks, and Fortune 500 technology companies enable trade through technology.
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