“During COVID, we went from just in time to just in case. Unfortunately, now supply chains have to factor in risk mitigation. Finding alternative sources of supply might be a little more pricey, but it reduces the risk.” - Alan Arcand, Chief Economist at Canadian Manufacturers & Exporters
For procurement leaders, macroeconomic signals often determine planning feasibility and strategic direction. As shifting trade dynamics and unpredictable tariff announcements create volatility, understanding these signals has become increasingly important.
Alan Arcand is the Chief Economist at Canadian Manufacturers and Exporters.He and I met at the Supply Chain Canada National Conference where he offered practical guidance for navigating economic uncertainty, highlighting recent impacts on trade and supply chains across North America.
Here, in Alan’s own words, are some stand-out moments from our conversation:
Macroeconomic Divergence: Hard vs. Soft Indicators
“There's a little bit of a divergence in the U.S. right now between what we consider those hard economic indicators... like GDP, employment, or CPI, there's not many hints of the impact of the tariffs yet... But if you look at the soft indicators in the U.S. (like business surveys, consumer surveys) consumer confidence is plummeting, business confidence is plummeting, and economic certainty is an all-time high. So that definitely is flashing red for the U.S. Now in Canada, you are seeing, unfortunately, the effects of the trade war in those hard data already.”
Alan notes the troubling gap between stable hard economic indicators and declining soft indicators in the U.S. For procurement leaders, this signals upcoming turbulence, necessitating cautious planning and scenario analysis to mitigate risks.
Interest Rate Uncertainty: Impact on Procurement Planning
“The tariffs make the job of a central banker incredibly difficult... they're waiting for that hard data to turn negative before they actually cut rates.”
Procurement leaders should watch interest rate decisions closely, recognizing that central banks face competing inflationary pressures from tariffs. Supply chain finance decisions should incorporate flexible models to quickly adapt to changing credit conditions.
Steel and Aluminum Tariffs: Supply Chain Impacts
“All signs point to a lot of pain for two important manufacturing sectors in Canada (steel and aluminum)… manufacturing has seen 50,000 job losses the last two months… So it’s been very devastating for the industry.”
The hardest-hit sectors offer urgent lessons: diversify supply bases, introduce dynamic supplier management practices, and actively build contingency alternatives to navigate sudden tariff-induced disruptions.
"Seventy-five percent of what the sector produces in Canada crosses the border to the U.S. About 40 percent of the inputs that the sector sources are sourced from the U.S.”
Deep cross-border integration in automotive underscores the severe vulnerability faced by interdependent supply chains. Procurement teams must build scenario-driven resilience plans, anticipating political moves that can significantly alter trade rules or sourcing costs.
Friendshoring and Strategic Diversification
“We went from just-in-time to just-in-case... now you have to factor in risk mitigation. Half our members are seeking alternative sources.”
Canadian manufacturers exploring nearshoring and friendshoring send a message to procurement leaders: invest in strategic supplier diversification and reassess geographic sourcing strategies, prioritizing stability despite incremental cost increases.
