Global sourcing under tariffs: A perspective of time series analysis

Abstract

Global sourcing is a complex process to acquire products and services from international sources, and therefore is subject to various disruptions. This paper focuses on the effects of the large-scale tariffs during 2018–2019 on global sourcing behaviors. Drawing on tariff implications from analytic models of global supply network design, we specifically examine the patterns of global sourcing and how tariffs could disrupt global supply chains by investigating time series of monthly sourced amounts. We draw 222 manufacturing firms from the FactSet Shipping database, with 3,348,595 unique observations covering time period between January 2014 and December 2019. By applying multivariate time series clustering algorithm, we identify seven unique clusters for these firms. We further examine the disruptive effects of these tariffs by using intervention analysis of time series in each cluster. The results of intervention analysis demonstrates that disruptive effects differ in each cluster. An additional analysis reveals that firm size, growth potential, and firm profitability are associated with firms’ ability to deal with disruptions. Overall, our results have important implications for global supply chain management.