August 1 was the date set by United States President Donald Trump to introduce significantly higher new import tariffs, unless a new trading term agreement was reached with the exporting country or region. This milestone gives us a good reason to have a look at the variations in purchase volumes between April—when the tariffs were announced—and now.

Using anonymized PO data from SAP Business Network, we're able to assess whether some global trends are confirmed by the behavior of the buyers on the network, using the  Community demand trends feature released at the beginning of the year. This tool is available to all enterprise account suppliers at a Platinum level to perform the same kind of analysis.

Observable uncertainty

The announcement of new tariffs in April and the foreseeable increase in pricing seem to have encouraged U.S. manufacturers to quickly secure inputs— commodities, parts, components, and raw materials—ahead of a potential end to the tariff pause that took place shortly after the announcement in response to a global trade shock.

The GEP Global Supply Chain Volatility Index indicated that European manufacturers operated at full tilt, driven by front-loaded orders from U.S. customers and a rebound in both domestic and export demand.

Now, looking at Demand trends on SAP Business Network, we can identify spending surges as U.S. companies sought to stay ahead of tariffs. Taking pharmaceutical products as a typically stable commodity, we observe a steep increase that started in April and dropped off just after, as well as another surge in July, just before the August 1 deadline. This is common across many commodities.

Shifts in supply chain

A BBC article summarizes the past four months, starting with the good news: The most painful of tariffs and recession warnings have been dodged. The worst fears—in terms of tariff levels and potential economic fallout (for the US and elsewhere)—have not been realized.

Some winning and losing countries are used as examples of how tariffs are affecting some countries or industries. The German automotive industry is listed amongst the ones challenged by a 15% tariff, which won’t help recover the falling demand observed in SAP Business Network’s demand trends since the April announcement.

In another industry, the escalating threats of high tariffs between China and the United States have prompted Apple to shift production to India, now becoming the main manufacturing country for smartphones sold in the United States. This sudden shift can be observed in SAP Business Network by filtering to Electronic Components sold to the Asia-Pacific region.

A future with fewer U.S. imports?

Some notable markets, including the European Union and the United Kingdom, have already struck a trading deal with the United States, which leads to a more relaxed mood in the financial markets. As this keeps evolving, businesses can make plans and investment and hiring decisions that had been paused. Most exporters know the size of the tariffs their goods face—and can figure out how to accommodate or pass on the cost to consumers.

It is too soon to conclude the influence of the new tariffs on future demand, but we can forecast that raising prices in the United States will diminish purchasing power, leading to less demand. The world’s largest economy importing fewer goods will greatly reduce demand globally. This can already be observed in Community demand trends on SAP Business Network, with, for instance, a general drop in consumer electronics and appliances being purchased in the North America region.

The global trend observed on SAP Business Network already confirms a lowering demand across most industries, including Manufacturing and Technology.

As the BBC article concludes, the greatest fears, the warnings of potential disaster, have receded. But Ben May, director of global macro forecasting at Oxford Economics, says that U.S. tariffs had the capacity to damage the global economy in several ways. August 1 already saw financial markets take a hit and remain brittle in the following weeks. The long-term effects of the U.S. tariffs will surely remain under global scrutiny, and SAP Business Network offers just the right tool for organizations to navigate through the varying trends relevant to their portfolio.

Community demand trends on SAP Business Network allows suppliers to keep an eye on global trends representing $6T worth of anonymized purchase orders data, and filter them by region, UNSPSC segment, family, and class.