Co-creation as a Superior Strategy to Retaliatory Tariffs

How to Convert Trump-Imposed Tariffs into Opportunities for Expedited Economic Growth

On 2nd April, Trump imposed tariffs on various goods, impacting economies worldwide. Instead of focusing on the negative repercussions, we can view this “new reality” as an opportunity for accelerated economic growth. The urgency felt by economies globally provides a fertile ground for exploring new opportunities.

The solution lies in co-creation at local, regional, national, and international levels to develop new trade deals, foster innovation, facilitate market and supply chain expansion, and mitigate risks.

Unlike retaliatory tariffs, which can escalate trade wars and destabilise the global economy, co-creation promotes innovation, resilience, and sustainable growth.

Co-creation involves businesses, governments, universities, and other stakeholders integrating their resources, knowledge, and networks to tackle challenges and seize opportunities that would be unattainable within their independent organisational boundaries.

Therefore, co-creation presents a powerful strategy to mitigate the global economic impact of tariffs imposed by Trump.

Here are several ways this approach can help:

1. Co-creating New Trade Deals

New trade deals can mitigate the negative effects of tariffs while enhancing opportunities for greater economic growth. Since many countries are affected by tariffs, there is a unique window of opportunity due to the sense of urgency felt globally.

Through co-creation, businesses can have a stronger voice in policy-making. In particular, governments co-creating with other governments, businesses, universities and other relevant stakeholders enable trade deals to capitalize on partner-specific knowledge, resources, and networks. This collective influence can lead to more favourable trade policies and expedited development of trade deals.

2. Co-creating Market Expansion

Co-creation efforts can open up new markets and reduce reliance on tariff-impacted regions. By working with international partners, businesses can explore new opportunities and expand their customer base. Governments can facilitate this by negotiating trade agreements and providing market access.

3. Co-creating New Supply Chains

Co-creation can lead to more resilient and efficient supply chains. By collaborating with various stakeholders, businesses can optimize their supply chains to minimise the impact of tariffs. This might include sourcing materials locally, partnering with suppliers from other countries, and developing innovative logistics strategies.

4. Co-creation enabling Shared Resources and Expertise

Co-creation allows for the pooling of resources and expertise. Businesses can leverage the strengths of their partners to overcome challenges posed by tariffs. For instance, a company facing high tariffs on imported materials might collaborate with local and other country suppliers and research institutions to find alternative materials or methods.

5. Co-creation for Innovation and Diversification

By working together, businesses can innovate and diversify their products and services. This collaboration can lead to the development of new technologies and solutions that reduce dependency on tariff-affected goods. Universities can contribute cutting-edge research, while governments can provide funding and policy support.

6. Co-creation for Risk Mitigation

Co-creating with diverse partners helps spread risk. If one sector is heavily impacted by tariffs, other sectors can provide stability. For example, a business affected by tariffs on manufacturing goods might partner with a tech company to develop digital solutions, thereby reducing its overall risk exposure.

7. Co-creation leading to Economic Resilience

Overall, co-creation fosters economic resilience. By building strong networks and collaborative ecosystems, businesses can better withstand economic shocks and adapt to changing trade environments. This resilience is crucial in navigating the complexities of global trade impacted by tariffs.

Co-creation offers a multifaceted approach to addressing the economic challenges posed by Trump’s tariffs. By leveraging innovation, shared resources, market expansion, policy influence, risk mitigation, enhanced supply chains, and economic resilience, businesses can effectively navigate and mitigate the impacts of these tariffs. Unlike retaliatory tariffs, which can escalate trade wars and harm global economic stability, co-creation fosters sustainable growth and resilience, making it a superior strategy for addressing global economic challenges.

By embracing co-creation, we can convert the challenges posed by tariffs into opportunities for expedited economic growth and innovation.

Let’s seize this moment to build a more resilient and collaborative global economy.

This blog has been written by Prof Muthu De Silva. Muthu is a Professor of Innovation and Entrepreneurship and the Head/Associate Dean of Research, Innovation and Knowledge Exchange, at the Faculty of Business and Law, Birkbeck, University of London, UK. She is a Co-Investigator of Innovation and Research Caucus.

For more information about the author and her research on co-creation, take a look here.