Latest news with #OliviaWhite
Mint
02-07-2025
- Business
- Mint
How Trump's tariffs could reorder global trade—and make Europe a winner
Europe could be at center stage as the Trump administration's tariffs upend the global trading system, slashing Chinese imports to the U.S., a report from the McKinsey Global Institute finds. President Trump's aggressive trade policy has sparked concerns about a recession and a painful unwinding of the globalization of recent decades that had expanded profit margins and kept prices low. A detailed look at trade flows by McKinsey offers a window into potential pain points—and how trade could be rearranged. Companies have been gripped by trade uncertainty since the Trump administration tried to reshape the trading system, announcing a blitz of tariffs against nearly 200 trading partners in early the administration has said several agreements are nearing the finish line, so far it has struck only one trade deal—with the United Kingdom—and been on a carousel of escalation and de-escalation with other major trading partners, including Canada, the European Union and China. Markets have become more sanguine about trade; the S&P 500 just hit a new record. Companies caught up in the trade war may need to reduce affected business lines, increase production of other lines, find new suppliers or absorb higher costs. The specifics are critical. 'So much of this discussion is based on high-level trade models but any individual supply chain readjusts at the actual level of trade so we wanted to look at what the options were," says Olivia White, a director at McKinsey Global Institute and co-author of a report that tries to assess the possibility of disruptions, shortages and price impacts to aid companies rethinking trade strategy. The authors developed a 'rearrangement ratio," measuring a country's imports from a trading partner as a share of what is available from other exporters. Those imports most vulnerable to disruption are the ones with higher ratios. The good news: About 35 percent of the $440 billion the U.S. imports from China have a ratio less than 0.1, which means that the available export market is 10 times as big than what the U.S. buys from China. T-shirts, taps and valves and logic chips fits into this bucket. McKinsey estimates about 60% of intermediate goods—including auto parts and semiconductors—are relatively easy to source elsewhere. Another 30% of intermediate goods have a slightly higher rearrangement ratio but could still be sourced from suppliers not in China. Only about a quarter of U.S. imports from China have a rearrangement ratio of greater than 0.5—and much of that is electronics, like laptops. McKinsey estimates only 5% of imports have a ratio of more than 1, which means the amount the U.S. imports buys China exceeds what is available from other suppliers. That latter bucket includes fireworks, charcoal barbecues, vacuum flasks, fireworks and natural graphite. While the rare earth magnets critical to electric vehicles and military applications are also in this grouping, McKinsey noted many other critical minerals don't rise to this level. Though Mexico and southeast Asia have been popular alternative destinations for those diversifying supply chains away from China, McKinsey finds Europe well-positioned both as an alternative supplier of exports to the U.S. and a large market destination. Based on most of McKinsey's simulations, European exports to the U.S. could replace 30% to 65% of what the U.S. buys from China, and Europe's U.S. exports could rise meaningfully even with tariffs. Turkey already is a large textile manufacturer for other parts of Europe. Poland sells lithium-ion batteries to others in the region, and Czechoslovakia is a big supplier of toys. If trade shifts, these countries could potentially ship more to the U. S.—and Chinese goods could fill the hole for European demand. 'Europe could emerge as the fulcrum for this rearrangement," White says. Perhaps that could give the European Union some leverage as it tries to reach some sort of a trade framework with the U.S.
Axios
26-06-2025
- Business
- Axios
The ratio that explains trade war economics
America buys a lot of cotton T-shirts from China — $277 million worth in 2023. We also buy a lot of fireworks — $465 million. But buyers of cotton T-shirts will have a lot more options to avoid the burden of tariffs than buyers of fireworks. The big picture: That's the implication of revelatory new data from consulting firm McKinsey, which calculated a "rearrangement ratio" for hundreds of different goods the U.S. imports from China. The ratio captures in a single number how hard (or easy) it will be for importers to find alternate, lower-tariff suppliers. That, in turn, helps answer the question of whether 55% tariffs on Chinese imports are likely, for any given product, to result in higher prices or cause importers to switch up and import from elsewhere. Zoom in: The ratio captures the value of U.S. imports of a good from China, relative to the total export volume for the product, excluding the U.S. and China. So a very low number, like 0.04 ratio for cotton T-shirts, indicates that there are plenty of supplies available on the global market, which allows importers lots of flexibility to shift to producers with lower tariffs. A number above 1, like the 1.25 ratio for fireworks, indicates that U.S. imports from China exceed exports for the rest of the world — meaning simply rerouting supply chains is impossible, and importers face high tariffs that they will need to pass on to customers and/or suffer lower profit margins. A number in between, like the 0.59 ratio for gas grills, suggests a product where importers might be able to find alternate supplies, but could struggle to do so, at least in the short run. After all, if U.S. imports from China account for more than half of total available market from the rest of the world, "that's an awful lot of available market to go and capture and try to rearrange," said McKinsey's Olivia White, particularly if those suppliers are locked into existing long-term contracts. Zoom out: The ratio helps capture the reality that not all products are created equal, and a one-size-fits-all analysis of trade economics doesn't capture what's happening on the ground. Goods with low rearrangement ratios are likely to be less affected by the trade war, as importers simply reroute supply chains. Consumer goods with high rearrangement ratios tend to be discretionary purchases that account for a low share of total spending (plastic ornaments, for example, with a ratio of 1.11). Importers are likely to pass on high tariffs, and consumers are likely to buy less. Business inputs, like industrial pumps and precursor chemicals for pharmaceuticals, are a trickier question, as they tend to be essential for U.S. companies producing higher-value products. What they're saying:"Imported consumer goods are going to be more discretionary and have higher price elasticity," White, director of the McKinsey Global Institute, tells Axios. "So to the degree that rearrangement is tricky, people might prefer to buy a little bit less."
Sky News
09-04-2025
- General
- Sky News
Welsh government can't guarantee lives won't be lost in another coal tip disaster
It is "difficult" to give a "cast iron guarantee" that lives won't be lost because of a coal tip disaster, the deputy first minister of Wales has told Sky News. Nearly 60 years since the Aberfan disaster, which killed 144 people when coal waste slid down the side of a mountain into a school, £130m has been invested in securing waste left behind by coal mining operations. Earlier this year, the Welsh government said up to £600m could be needed to secure coal tips across the nation. Olivia White, who lives beneath a disused coal heap in Cwmtillery that has been deemed a potential risk to public safety, says she is living with "horrific fear every day, waking up thinking we're lucky we're here again today". Ms White's home was one of around 40 evacuated when part of the coal tip collapsed last year. She says she will never forget opening the door and "thick, dirty sludge pouring through". She warned: "I think it is going to take somebody to die or something awful to happen until they realise how serious this is. That's what it feels like. Aberfan just lingers over me all the time". Her neighbour, Zara Cotterell, says it was "very lucky" that children weren't playing outside at that time. She says: "It was 7.30pm, if it was 5.30pm the street above would have had all the children playing; it took a car, it took a garage, it would have taken lives." Work is under way to secure the tip at Cwmtillery, which could collapse again, but both women say they feel "no one is listening" to them. There are 2,573 disused coal tips across Wales, 360 of which are categorised as having a potential impact on public safety. Deputy First Minister Huw Irranca-Davies says he can give people an "absolute guarantee" that no expense is being spared to fix the problem. However, he said it is "pretty difficult" to give a "cast iron guarantee" that people are safe. "It's an almost impossible question," he said. Mr Irranca-Davies said the Welsh government has spent the last five years assessing which tips are the most high risk and work is starting to secure them. He added that the £600m figure is a long-term goal to totally clear the tips, not all of which are high risk. In the autumn budget, the UK government provided the Welsh government with £25m for essential work on disused coal tips. The Welsh finance minister Mark Drakeford is seeking a £91m commitment over three years from Westminster. Mr Irranca-Davies says it is "great" that "after years of asking" there has been a contribution from the UK government. Wales Secretary Jo Stevens says she wants people to feel reassured that coal tips are being inspected regularly and the "significant sum of money" given in the autumn budget will deal with the risks. Plaid Cymru says the £25m from Westminster falls short of what should be paid, adding that Wales "can't afford to wait for a tragedy to happen". Delyth Jewell, a member of the Senedd for South Wales East, says the coal tips are "ticking time bombs" and "Westminster should be paying to clear these tips". "Money, it's not a question of [it] should be found. Money has to be found because this is correcting a historic injustice that should never have happened," she said. "And if they can't prioritise clearing the coal tips in the valleys, who do they even represent? Who do they stand for?
