Navigating export control: strategies for futureproofing global trade
June 2025 | TALKINGPOINT | GLOBAL TRADE
Financier Worldwide Magazine
June 2025 Issue
FW discusses export control and global trade with Jan Timmermann, Nigel Pekenc and Ramandeep Babrah at Kearney.
FW: In what ways are geopolitical pressures and protectionism altering the global trade landscape?
Timmerman: We are not even halfway into 2025 and we can already say confidently that we are witnessing this year a fundamental restructuring of global trade after decades of efficiency-led globalisation. The shift toward a more fragmented trade environment and heightened geopolitical risk is pushing businesses to build greater flexibility into sourcing and operations, even if it means higher costs. Most companies now view ‘China plus one’ sourcing – or sourcing materials from both China and at least one other country – as the new norm, not just as a contingency. Reshoring, even with aggressive automation, is not the answer to today’s pressures, as it drives up production costs substantially. The firms that are outperforming in this environment are those with modular operating models, diversified markets and suppliers, and the ability to stay flexible without losing scale efficiencies. This marks a permanent move toward a trading system where control and security consistently take precedence over pure efficiency.
Pekenc: There is a deeper, longer-term shift behind the current wave of protectionism: the withdrawal of the global security and trade guarantees that assured the globalisation of the late 20th and early 21st centuries. For decades, the global trading system relied on these norms. But recent events have accelerated their decline, fast-tracking a return to multipolar trade dynamics that could have taken years, even decades, otherwise. While the long-term shape of these new norms remains uncertain for now, the biggest mid-term risk is increased volatility across global value chains that were built around global access, scale and predictability. One of the biggest shocks may come from a repeat of the demand surge we saw in 2022 to 2023, as supply chains struggle with reduced scale, supply gaps and demand swings they are no longer set up to handle.
Babrah: Geopolitics and protectionism are now challenging the decades of globalisation that once drove global trade. While recent trade actions have accelerated this shift, there were longstanding concerns about overreliance on Asian supply chains before 2025. In short, we are entering a new era of global trade where geopolitics and protectionism are fast-tracking deglobalisation. Cost efficiency is giving way to control and security, and global logistics are becoming increasingly complex and constrained.
“Cost efficiency is giving way to control and security, and global logistics are becoming increasingly complex and constrained.”
FW: How are current trends in geopolitics affecting global trade policies?
Pekenc: Geopolitical factors have become the primary driver of change in global value chains but, beyond the obvious factors of tariffs and trade barriers, there are longer-term shifts that also fall into this category. Inflation is one of these – and not just of the post-pandemic demand-driven variety. In recent decades, we have seen countries with large labour pools, like China and India, face significant manufacturing cost advantages and a corresponding wave of global consumer price deflation. As income levels normalise worldwide, however, the cost of manufacturing has also levelled out. This then makes countries that once offered low-cost manufacturing less competitive. This shift has prompted a rethink of manufacturing locations and the reconfiguration of supply networks. It is time to reconsider traditional trade relationships, such as China being ‘the workshop of the world’ and the US as the ‘prime consumer’. Given the volume and uncertainty of second- and third-degree implications, such as the formation of new trading blocs, considering alternative global trade scenarios is necessary, rather than clinging to certainty.
Timmermann: Without doubt, trade policy has become the primary battleground for strategic competition, shifting cross-border investments toward political affinity groups rather than purely economic factors. The global structure is fragmenting into a ‘geoeconomic’ system, where security concerns always take precedence over efficiency. Capital deployment now often requires mapping political dependencies across entire value chains. Events like the United States-Mexico-Canada Agreement renegotiation showed how quickly foundations can shift, causing long periods of operational disruptions for affected companies. As a result, regional agreements and trade blocs are becoming more significant as countries seek deeper integration within trusted circles. With growing geopolitical competition, trade policies are increasingly transactional and strategic, influencing long-term investment decisions. The winners in this environment will be those with sophisticated policy modelling capabilities, once reserved for sovereign risk specialists.
Babrah: Economic blocs like the European Union are already discussing increased regional collaboration, especially in areas like regional security and sovereignty, such as defence and semiconductors. Meanwhile, major emerging economies like China are strengthening ties within Asia, including with India and Vietnam, to bolster regional trade corridors.
FW: What role will changing trade agreements play in influencing companies’ trade profiles and supply chains?
Babrah: As new tariffs, restrictions and compliance standards emerge, it is a given that companies will be forced to navigate how to offset increasing costs by reconfiguring trade profiles and supply chains. We are likely to see two main responses. First, in sectors dependent on critical inputs like lithium or rare earths, switching suppliers is not easy. Companies in these industries will either absorb higher costs, which will pressure margins, or be forced to pass those costs onto customers. Second, for more flexible inputs, companies will actively seek new trade corridors and partners in countries with favourable agreements. This shift is not new but it is certainly accelerating now. Trade agreements, once viewed as long-term frameworks, are increasingly seen as tactical levers that directly impact sourcing, pricing and investment flows.
Timmermann: Trade agreements have shifted from being static frameworks to dynamic variables that require constant monitoring, in 2025. Investors are increasingly prioritising ‘treaty network optimisation’, positioning production in countries with advantageous trade agreements. If executed properly, this approach can boost gross margins.
Pekenc: Many businesses are struggling to predict demand as the steady equilibrium baseline we once relied on is now becoming a distant memory, leaving volatility in its wake. This means demand forecasts, which all supply chain plans are based on, have become even harder to set. As upstream material processors and downstream finished product assemblers alike struggle to set capacity and stock without reliable history to base predictions on, the effects of sudden demand surges and drops are magnified as demand information works its way up the supply chain. This ‘bullwhip pattern’, which used to be measured in weeks or days, now stretches over months or even years due to recent geopolitical shifts. The end result is that many companies are producing either too much or too little, with very few hitting the ‘Goldilocks’ optimum of stock, as a potential demand bullwhip moves through supply chains.
“The best value chains will evolve from simply ‘doing’ digital to ‘being’ digital, where data and system integration are at the core of all operations.”
FW: What trade-related issues should private equity firms consider when evaluating potential investments?
Timmermann: The days when trade was just an operational consideration are over. Industrial policy has been elevated from a back-office issue to a core investment committee topic. Today’s successful investments fundamentally integrate trade strategy into the core thesis, pricing both risks and opportunities before capital deployment. Private equity (PE) firms must include trade disruption scenarios in base-case financials, stress-testing whether cost pressures from tariff increases could breach operating covenants rather than simply erode margins. It is crucial to assess target companies’ operational agility, such as dual sourcing, geographic diversification and compliance capabilities, to mitigate trade disruption risks. Firms should also map concentration risks across tier 1 to tier 3 suppliers before closing and quantify the capital required for potential restructuring. And that is not forgetting that firms should now apply ‘trade resilience premiums’ in valuations, recognising that supply chain flexibility may warrant additional earnings before interest, taxes, depreciation and amortisation multiples. Such diligence is essential, as companies highly vulnerable to trade disruptions tend to experience more frequent covenant breaches during holding periods.
Pekenc: From a supply chain perspective, there are three key risks PE firms need to factor into decision making. First, the acceleration of deglobalisation and, at a minimum, diluted free trade will increase cross-border costs, constraints and lead times. Second, these costs are likely to drive renewed consumer inflation in certain sectors, while stranded capacity on the other end of the equation may create pockets of sourcing opportunity elsewhere. Last, the combined effect of increased uncertainty will be expressed as demand volatility and accelerating supply shocks, all likely to characterise the trade era the world is moving into. Making decisions that not only account for potential downsides but also seek pockets of upside across the changing landscape will be critical.
Babrah: It might be helpful to look at risks through two separate lenses: supply resilience and market access. On the supply side, disrupted trade routes, export restrictions or increased tariffs can hinder a target company’s ability to source inputs efficiently, affecting product quality and profitability. On the demand side, higher landed costs can reduce competitiveness, especially in price-sensitive markets. Before committing capital, PE firms should carefully assess how well a target company manages trade-related cost pressures and whether it has the operational flexibility to shift suppliers or production. It is also crucial to evaluate the capital required to build a resilient supply chain, whether through regional diversification, dual sourcing or investing in local infrastructure. Essentially, trade dynamics should now be a core part of operational due diligence, not an afterthought.
FW: What strategies should companies implement to mitigate the effects of changing trade policy? How can these strategies be kept up to date with frequent regulatory changes?
Pekenc: The most resilient manufacturing businesses in years to come will be those that pivot around complexity and risk, while maintaining the scale benefits of globalisation. Enhanced digitalisation and innovative strategies for handling intricacies and uncertainties will be vital in navigating the complexities of future global value chains. The best value chains will evolve from simply ‘doing’ digital to ‘being’ digital, where data and system integration are at the core of all operations. Businesses might embrace this through going beyond plug-in risk scanning tools, to invest in resilience embedded into the organisation. Alternatively, investing in the agility of supply chains and adaptability of business models will enhance customer value and make the most of efficiency opportunities. Ultimately, advantage will fall to those that understand the fundamentally complex and multilayered nature of global supply networks cannot be reversed and make the most of their data, which is quickly becoming the new source of differentiation. Those who can better source, connect and integrate data will increasingly set the competitive pace.
Timmermann: Companies need tiered strategies combining monitoring, modelling and operational flexibility. The most effective approaches link digital trade intelligence systems, which provide real-time regulatory alerts, with contingency plans tied to predefined triggers. Artificial intelligence-driven predictive analytics can flag potential disruptions early, giving businesses a head start in reacting to changes, but a clear contingency plan is still needed to show how to react. The financial case is compelling. Firms that invest in supply chain resilience tools consistently outperform peers during trade disruptions, often offsetting the upfront investment through reduced downtime and faster recovery. However, rather than defaulting to reshoring or nearshoring, companies should prioritise ‘friendly diversification’, building redundant capabilities across politically aligned jurisdictions. Leading firms maintain warm supplier relationships that can be quickly activated when needed, avoiding the fragility of over-concentration without incurring the costs of full duplication. When done right, trade resilience shifts from being a cost burden to a source of competitive advantage, ensuring operational continuity precisely when others falter.
Babrah: A layered, flexible approach to navigating trade policy risks is essential – looking across supply disruptions, economic volatility, geopolitical shifts and constant regulatory changes. It starts with digital systems to track regulatory changes in real-time, followed by predefined response plans built around tested trade disruption scenarios. These solutions must be embedded into broader business planning, covering supply diversification, continuity and regulatory agility. This includes selective reshoring of critical components and building friendshoring networks within preferential trade blocs to preserve access and minimise exposure, requiring continuous vigilance and agility across the value chain. Businesses will also benefit from exploring intelligent automation, predictive analytics and real-time connectivity. These tools offer significant savings by reducing customs clearance times, minimising paperwork and preventing compliance-related delays. Systems can automatically determine tariff classifications, calculate duties, validate documentation and flag potential compliance issues, transforming traditionally manual processes into streamlined digital workflows.
“Trade agreements have shifted from being static frameworks to dynamic variables that require constant monitoring.”
FW: What essential advice would you offer to companies on understanding and complying with complex and evolving trade policies?
Babrah: Companies must elevate trade compliance to a strategic priority, not just a reactive function. This means making compliance a centralised responsibility with board-level oversight while staying closely connected to local teams for intelligence, to enable faster, coordinated decision making in response to changing trade regulations. When compliance is seen as a business enabler rather than a hurdle, it becomes a powerful source of competitive advantage.
Timmermann: Companies with integrated trade strategies experience fewer disruptions and recover more quickly when facing policy changes. Investors should view trade compliance as a strategic, value-creating function, not merely a back-office task.
Pekenc: For now, businesses should focus on short- to mid-term ‘no regret’ actions to mitigate value at risk. These could include negotiating pain-sharing agreements with suppliers, incorporating clauses for tariff adjustments and evaluating tariff impacts across spending, suppliers and harmonised tariff schedule codes to inform price increases rather than applying a blanket approach. Over the longer term, companies should prepare for structural adjustments, such as rerouting manufacturing to lower-tariff regions, accelerating supplier qualification processes, and rethinking product designs to eliminate or replace components with high trade risks.
FW: How do you see trade control practices evolving in the future? How can companies stay informed on regulatory changes and futureproof their strategies?
Timmermann: The rise of ‘geoeconomic fragmentation’, where trading blocs are forming along geopolitical lines, is accelerating. As a result, trade control practices are becoming more dynamic, stringent and complex. In this environment, where tariffs, sector-specific regulations and non-tariff barriers are increasingly being used as geopolitical tools, companies must manage parallel supply chains and navigate divergent regulatory regimes across regions. Resilient companies can futureproof their strategies by institutionalising regulatory intelligence functions that continuously monitor global trade developments, leveraging both technology platforms and expert networks. PE firms should ensure their portfolio companies are not only compliant but also positioned to capitalise on new opportunities created by evolving trade agreements and market realignments. This may involve investing in technology, developing new supplier relationships or restructuring operations to optimise for the changing global trade landscape.
Babrah: The future of global trade is unlikely to follow a single pathway. Multiple scenarios will likely emerge in parallel, shaped by economic shifts and geopolitical dynamics. Companies must prepare for a hybrid model, where competing regional trade frameworks coexist, requiring navigation across multiple compliance regimes. Trade controls will tighten, particularly around critical minerals and material traceability across supply chains. Trade governance will grow more complex, combining global standards, regional integration and bilateral rules. In this evolving landscape, successful companies should embrace systematic scenario planning, creating adaptable supply chain configurations and maintaining flexibility to adjust as conditions change. Strong policy engagement and trusted relationships with stakeholders such as customs, trade advisers and regulators will be critical. This approach should be supported by digital tools that can help quickly cascade disruption signals across the value chain. Navigating this complexity will require a blend of technology, regulatory expertise and government affairs capabilities.
Pekenc: While the frequency of short-term trade policy changes is rising, those who recognise the underlying trend toward greater uncertainty and multipolar trade will emerge as long-term winners. It is important to understand this trend, but businesses also risk wasting valuable resources trying to predict the next shift in trade policy. As Mark Twain once said, “It isn’t what you don’t know that gets you into trouble. It’s what you know for sure that just isn’t so”. With that in mind, the most resilient approach is to build organisational agility and flexible capacity, while strengthening the weaker parts of supply chains irrespective of the external trade risks. Designing a business strategy and supply chain based on a fixed assumption of what the world will look like in five years will not suffice anymore. Instead, leaders should develop options based on alternative trade scenarios and be prepared to pivot as certainty emerges.
Jan Timmermann is a partner at Kearney. With over 20 years of experience in industry and professional services, he has managed more than 50 private equity assignments across a broad range of sectors, including consumer products, technology, healthcare, life sciences, energy and business services. His skill set covers operational due diligence to post deal-transformations, including post-merger integration, transformational carve-outs, operating model design, operational restructuring, strategy development and implementation, and finance transformation. He can be contacted by email: jan.timmermann@kearney.com.
Nigel Pekenc is a partner in Kearney’s strategic operations practice, based in London. He has advised clients in industries from engineered equipment to healthcare in getting the most across cost, cash and service from global supply chains. Over recent years, he has focused on the reconfiguration of global value chains to meet changing needs as supply and demand shocks continue, geopolitical uncertainties increase and the ‘steady baseline’ years recede. He can be contacted by email: nigel.pekenc@kearney.com.
Ramandeep Babrah is a senior manager at Kearney, with over 12 years in professional services. He specialises in technology and innovation localisation, advising governments and corporate organisations on developing deep-tech capabilities, setting technology roadmaps, and designing policy and investment programmes. His work supports the shift toward sustainable, knowledge-based economies. Beyond Kearney, he is a fellow with the World Economic Forum, contributing to their Centre for Advanced Manufacturing and Supply Chains. He can be contacted by email: ramandeep.babrah@kearney.com.
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