 We are live. Hi, everyone. I'm Chris Kaplus. Hi, I'm Eva Ponce. And we're going to thank you for joining us on this live event. This is the first one we've done that's kind of a cross class. And so we've invited anyone who's in the current class, as well as some of the MicroMasters credential holders, and pretty much anyone who's currently actively involved in the MicroMasters program. We thought it'd be a nice idea for you guys to see a live event. And it's going to be kind of focused on current events. And on this one, we'll talk about it in a second. We're going to be talking more about global tensions and trade. And so you'll be using Slido. And I'll explain all that in a second. We'll also have some other people joining us as well. So Arthur, if we can go to the slides. So once again, welcome everyone to the event. I'm going to talk for a little bit. And then what the agenda is going to be is Ava's going to talk about an update of the program. Some of you have finished the program over a year ago. Some of you have been involved with us since the summer of 2014 when we did the first one. We wanted to get you up to speed on what's been going on here at MIT. Then we'll talk a little bit about the question at hand, facing global trade tensions. And then we'll wrap it up with open questions. Now there's a lot of you out there. And so what we're going to do is use an interactive form that if you've been on some recent live events, you're comfortable with this. I'm going to explain it for some of you who have not seen it before. We're going to use something called Slido. So if you have a phone, a tablet, or your computer, just go to slido.com and then enter in the code, which is MIT-SEX-LIVE just as it's written on the screen. And this will enable you to do two things. One, you can respond to polls. And we have a poll out there right now that's asking what you think about the increased tariffs between your country and trading partners. Will it be good for your country or bad? But it's also a way for you to enter in questions. So you can go in and enter a question that you want Ava and myself to answer. Ava will answer all the hard ones. I only answer easy questions. But then the other thing, once you enter a question in there, you vote on it. And we will go through and answer those questions in the order of priority. So you can upvote questions to see if you want them. And we took off the option for you to downvote. We thought that'd be too negative. You can only upvote questions. You can't downvote them. And like I said, the polling questions will ask those periodically throughout. And so now I think I want to turn it over. Oh, first poll. So here's our first new poll that we have. And this is just to see who we're talking to. And it's asking very simply, what country are you watching this live event? And so feel free to enter in and try to use one word for your country. There we go. And we'll just get a sense of this. And you'll be able to see how these responses come in. I don't think we'll have too many from China because it's what, two in the morning now? So yeah, it's going to be tough. It's a little bit early, yeah. OK, all right. So we'll let you guys put those in. And then I'm going to turn it over to Eva. Excellent. Thank you, Chris. And welcome. Welcome again to this live event. So I'm going to share with you the latest statistics we have for the MicroMaster program. The first thing I want to share with you is you are part of a huge community of learners. So far, we have more than a quarter of a million of learners that have taken at least one SEX course. 17,000 of these learners are verified learners. This means that at least they show us the intention to pursue for the certificate. So far, we have issued 25,000 certificates. And in terms of credentials holders, these are the students that already completed the five SEX courses plus the CFX. We have 1,062 credentials holders, MicroMasters credentials in supply chain management. You are also part of a global community of learners. We have represented more than 190 countries in this program. I want to ask you one question before moving to the next slide. Which SEX courses have you finished so far? So let's see how many of you have completed one tour. Yeah, you can enter in the ones that you finished. And while you're doing this, you can try and find yourself on the picture on the slide. My dogs are on here somewhere using the lower left corner. But Arthur, I think you cut them off. Yeah, but you can find some of yourselves. But it looks like, as we would expect, more people have taken the entry course, SC0X. And as you move down the line, we have a little bit of drop-off. The funny thing is for you, old-timers who've been here for two years, they weren't all there at first. And so being able to take them in sequence, which we highly recommend, has only been available to you guys in about a year and a half. So it looks like we're getting more people doing that. But it's good to see we have a nice mix of different people. Awesome. 86% with SC0X. Great. So in terms of the countries that are represented, so USA is the most represented country in our program, with 22% of our learners. And the second one is India, with almost 15% of our learners. The third position, always, we have some Latin American countries fighting here. We have Brazil, Mexico. Also, Canada is very well represented. Europe, we have Spain, Germany. UK is also with almost 3% of the learners. And I need to say that we have also people from almost every single country. We have people from Nigeria, from Kenya, from Oman, from Bora-Bor, from the islands, from many different countries, which is something that we are really fascinated about that. In terms of the status of the program, we have delivered so far 21 SCX courses and two comprehensive final exams. Currently, we are running Supply Chain Fundamentals and Supply Chain Dynamics. This fall, on September 5th, we are going to open the new SC0X, Supply Chain Analytics. We are also going to run SC2 and SC4X this fall. So the upcoming event that we have now is the CFX. So this weekend, we are going to open the third round of the comprehensive proctor final exam. We are going to open this Friday at 1500 UTC. So far, we have 323 verified learners that are intending to take the comprehensive exam. It's going to be 100% virtually proctor this time. We are not offering the option to take it physically this time. I also want to mention here that the whole team is going to be here in these 72 hours just in case you have an issue. I hope that you are not going to have an issue, but just in case you can always send an email to cfxhealth.mit.edu. The whole team is going to be here covering these 72 hours. We'll be here virtually. Virtually. We all won't physically be by the dome, but we'll be here doing this. I want to point out that this is the first time we've done it virtually proctored. Prior to this, many of you who have taken the CFX before came to MIT or one of our five other international scale centers. So we're trying to see which is easier to do. It's easier for us to administer one test virtually, but we'd love to get feedback on how you guys feel about that. But we'll see how it goes. In terms of how we run all of these courses, as you can imagine, this take a village. There is a lot of people involved in developing this program and running this program. So so far, nine course leads has been part of the MicroMaster team running one SCX course. We also have 10 teaching assistants. First semester, we typically have two to three teaching assistants. And we assign one teaching assistant to one SCX course. We also have our community manager, Arthur Grau. He's helping today, developing this life event. And he's also in charge of creating this community of SCX learners. I also need to mention here our community teaching assistant. These are volunteers. These are learners that have completed as a verified learner at least one SCX course with us. And they are helping us to moderate the forums. These learners are also attending to weekly meetings with our course leads. And thanks to the feedback that these CTAs are bringing to us, we are improving our courses. And as you know, we are always very open to receive your feedback, because this, at the end, help us to improve the program and to have a better program. So thank you to our CTAs. I know that some of you are connected today. So thank you for joining us. And thanks for all of your hard work every single day. OK, how we develop this program and why we have developed this program, two main reasons. One is the credential by itself, the standalone certificate. And we are very happy to see some of our learners reporting us that they get a new job, a new position in supply chain management because of the MicroMaster Credential. Mia is an example. She got a supply chain management position in Akamai, close to here in Kendall Square in Cambridge, Massachusetts. Will, he is in Australia. And he moved from finance to supply chain management, the supply chain management field. He also changed the industry. And he is now managing a team in supply chain management. So these are some of the examples of students that are using the MicroMaster Credential in supply chain management. I have one question for you guys. What is the biggest benefit that you have received by being part of the MicroMaster program? We really want to know better why you are taking this program and what do you expect from this program? Another reason behind this program is we developed that also as a pathway to earn a master degree. A master degree here at MIT, but also a master degree in any other university that decided to recognize the MicroMaster as a pathway for credit. So once you earn the credential, you can apply to what we call here the blended master degree. This is one full semester here at MIT. So the traditional supply chain management master degree takes two full semesters. With the MicroMaster, what we are doing is we are recognizing one full semester for the MicroMaster. And then you just need to spend another full semester here on campus. And after that, if you complete this successfully, you will earn the master in supply chain management here at MIT. There are other universities recognizing also the MicroMaster as a pathway for credit. We have universities in USA. Purdue is an example, RIT. But we have also universities all around the world. We have universities in Australia, Queensland University, or Carthage University. We have also universities in Spain. Saragosa is an example in Malaysia, the Malaysia Institute for Supply Chain Innovation. Universities in Latin America, Galileo. More universities are coming. We've recently signed an agreement with Thailand Technical University of Thailand. So this is also an opportunity for you to continue with your supply chain management studies in many different places. OK, I brought here the example of the most recent cohort for the blended program, the supply chain management blended master degree. In May 2017, 622 learners passed the first comprehensive final exam. 130 of those learners applied for the blended master degree at MIT. We admitted 40 students. These 40 students recently graduated. They graduated last May, 2018. We are most of them from international countries. They are international students. Almost 80% of these students from 23 different countries. But what I want to highlight here are these different countries. We have a student from Bangladesh, a student from Jordan, from Nigeria, Kenya, or Oman. So these countries that are not very well represented in the traditional programs. And thanks to this program, they got this degree. So this is something really, really nice. This is the first cohort of the blended programs. So I just want to share with you their faces to congratulate them for this achievement. Continuing with the program, we are also very happy to see this spontaneous meetup group. These are people that decide to study together in many different locations. In Chicago, in Singapore, in Peru, Lima, in Hong Kong, also in Germany, they just spontaneously decide to meet and to study together or to discuss just a relevant topic in supply chain management. So Arthur Grau, our community manager, is behind this meetup group. And we are really happy to see that this is happening in a spontaneous way. And we hope that all of you on the session right now are also meeting with each other in your local area. You can use the portal, which you'll talk about in a second, to identify and find people for a local meetup. Or you can reach out to Arthur directly or any of us to see if we know of anything in that area. Or we highly encourage this. Definitely. Yes, and finally, I really want to encourage you to be part of the MITx MicroMaster portal. This is the space we have created for those of you that already completed one course or already completed the program. And you want to share your experience with your peers. We also post here any job openings that we have. GE is offering interviews to MicroMaster holders in Cambridge. A Brazilian consultant company just posts some opening job for MicroMaster holders in supply chain management. It's also a space for you to discuss any topic about supply chain management. And at the end, to keep in touch with us and to provide your feedback, keep in touch with the staff and with the whole team here. Let's have a look to the poll and see the results. Let's see what is the biggest benefit that you have received by being part of the MicroMaster, gaining a better understanding of current job? Yeah, this is something that most of our students report to us. And I think the reason is because it's very industry oriented and very applied. The problems that we offer here are very, very applied. But of course, other is the second most popular one. Whenever you give someone five options, they'll pick a sixth, right? So we have a new one. So if you picked other, send us an email. Let us know what that benefit was, because we're always curious to find out why you're interested in these programs, because then that helps us customize them. It's good to find 10% found a better job at a different organization, because we're here to improve your career. That's the main purpose of this program. So keeping in touch with us through the MicroMaster portal, yeah, with that, I complete the overview of the program. Excellent. So it's changed a little bit since some of you were engaged with us. So hopefully, if you ever make it up to Cambridge, you can come and see us in real life. You're always welcome to stop in. But what I want to do now is switch topics. And I'm going to talk a little bit more about global trade tensions and supply chains. And with that, I'm going to try something new, and that I'm going to actually, instead of using the glassboard that many of you have used, have seen before, I'm going to use the big table. Pretend I'm on CNN. So let's see if I can do this. So what I want to do is start talking about global trade. And so the thing we're trying to figure out here is we're trying to find out the tensions, because there's been a lot of things in the news lately. But I want to remind people, global trade is massive, and it's grown tremendously over the last 30 years. When I graduated from high school in 1980, it was tiny. And you look at where it is now in 2017, this is annual global trade across the world, not just within the US. And it's 15 million million, right? So lots, lots, lots out there that's going on. And this shows it by quarter, by year. But then this here, what this is showing is the total imports or exports that are going in. But you can see it, if we did imports, it'd say the same thing, because this is world to world. So we have a lot of trade that's continuing to grow. So global trade is a big piece of our economy. Now I've got to erase everything I just wrote, unlike CNN, but next slide. But the thing is, even though it has been growing, there have always been protectionism. There have always been different levels by different countries. But the thing is, it's steadily decreased. Look at how much it decreased, especially for red for developing countries. This is the average tariff globally at that point in time, from the early 80s, 35% down to slightly below 10%. I mean, that's amazing what that drop has been. And so while, yes, there has been protectionism, it's dropping lower, but the question is, for next slide, is it changing? And so this is just a quick snapshot. I actually put this together yesterday of just headlines that I found that day, whether the economists, which is usually pretty level-headed, full-blown trade war between America and China, the New York Times, trade war is officially underway, the Boston Globe, US-China trade war, elevates risks to the global economy, and of course, CNN saying we started the biggest trade war in history, and then the best one, the BBC attacks the gorilla in the room, the elephant in the room, is this the end of global trade? Is globalism done? And so that's the thing, are we at this point? Because there's a lot of things in the press for this, and the question is, are we? And so we have a poll that I'd like to do. And this poll is asking for trade tensions. When we had our very first poll, I asked to open up, if you thought this was bad or good or very bad for your country, and the majority was a bad, but not a very bad, but another question that I wanted to ask is what do you think the impact is gonna be on consumers? Will it increase higher prices or will it decrease? And I always have to give the, it depends option, right? Because it's usually, you're sitting on the fence there, but it's pretty overwhelming that people think it's going to increase higher prices when you ask a generic question like that. But what I wanted to do is start bringing in Alexis Bateman. Dr. Bateman is currently running the SC3X course, and there's been a lot of discussion because in SC3X, we actually teach global supply chains, and I think it just finished up this week. So Alexis, what have you been hearing in your discussion on this topic? Yeah, thanks, Chris. Yeah, so as those of you that are already in the course or have already taken the course, we have two weeks on global supply chains that touch on a lot of these topics. So we actually have been very active in the discussion forums from students who have very interesting perspectives on this. So there's a couple of topics that have popped up kind of repeatedly in the discussion forums, and one of them is intellectual property theft. And so this is kind of a topic that is coming up as possibly an issue going on in these trade tensions, whether China's supposed IP theft of US intellectual property could be ranging from anywhere from about 225 to 600 billion per year. So there's been a lot of discussion on whether that is source of why Trump is doing what he is doing, or whether how likely those numbers are actually in reality. So others argue that possibly American policy on IP theft needs to be clarified so that there's a little bit more of a towing the line between legal technology transfer and outright theft of IP. So this is a kind of an underlying issue that has come up and students have really been engaging on how they think this is kind of playing a role in these trade steps, or excuse me, trade tensions between the United States and China. Another topic that's come up quite a bit is really the trade deficit between US and China. So looking at sort of running these China running a huge surplus in tech and manufacturing over US goods leading to this deficit, which is almost at 375 billion in 2017 with China kind of having the bigger trade surplus over United States. So students have kind of been discussing whether this is having some major issues and major conflict here and why this is driving further tensions. Another kind of major kind of trend in the discussion forums and we've been going back and as we are talking about now is how it's going to impact different industries and different regions differently. And so whether ones are gonna be a harder hit, whether some are gonna be thriving. So a lot of people have different thoughts on either what's going to happen or personally what's been happening in their own industry. And so one student was talking about how they feel that the EU's gonna be a big loser with these ongoing tensions and they felt and in their position, particularly the automotive market. And this is largely because if there's an increasing tariff by China on US made autos, German car makers like BMW can actually be hard hit because they actually produce some of their cars in the United States and export them to China. And so there's really some of these different regional impacts that are taking that the students have been discussing other kind of topics and we'll touch on this a little bit later, but thinking about how possibly it can be sort of a benefit to countries such as in Southeast Asia and Asia in general where Asia is actually becoming more reliant on Asia with their inability to purchase some of their goods in the United States. We'll talk about that in just a second and I'll ask you specifically about that. But what about the question of offshoring or on shoring? I know that's come up a little bit. And it's kind of related as well because it's a strategy that a company can take. So how has the discussion been in that respect? Right, so some anecdotally, we kind of hear in supply chain that everyone's on shoring kind of to reduce their risk and kind of make sure that they have more control over their supply chain, it's closer to them. But actually in recent studies and one that was released by AT Kearney, excuse me has actually shown that there was less, sorry, a little bit less of an on shoring trend in going on right now. And so students have really kind of touched on what's been happening in their own personal experience and that's aligned with that study that there hasn't been a big on shoring trend and whether kind of trying to think about whether in these current times whether that's going to become more of a trend to start on shoring some of their manufacturing and processes. So there's been sort of debates on both sides. Definitely some discussion then kind of leading into some of the other things we've talked about in the courses and increasing visibility. If we aren't on shoring, getting more visibility into their supply chains, more transparency, more real time information. And so this is an ongoing debate in the class. So in these last two weeks, we've really gotten a lot of dynamic discussion about how students are in their positions as supply chain professionals are being impacted by these every day. Okay. Yeah, I know there's been a lot of discussion about maybe manufacturing will move more localized, right? So you'll have European manufacturing and separating when Brexit brought this up too. Well, there'd be idea that some manufacturing would move some operations just for Great Britain to work on that demand and then move something into Europe. But I think there's been a lot more smoke than fire. A lot of stories, but I haven't seen too much action. Yeah, I think that the Brexit is a bit different because it's kind of a more permanent thing. Nothing is permanent, Ava. That's true. That's true, but so far they are out of the European Union. And most of the companies are considering to move their suppliers from UK to Europe or abroad UK because of that. So there is a recent study and they said that almost 50% of the companies in Europe are considering to replace the supplier in UK for another supplier. So it's going to maybe have a huge impact on this supplier base. And another interesting thing is this week, Alexis, I think you just released the risk monitoring on resilience week with Professor Sheffi. He's discussing the principles of resilience discussing about redundancy and flexibility. That is something that in this environment, supply chains need to consider. So there is an interesting discussion about the state of about having redundancy. Are you saying our topic that we're teaching is actually relevant? I think it's very well-timing now. It's perfect to have risk monitoring now. Thank you, President Trump. Thank you. Thank you for bringing that. All right. So I think one thing that we can all agree upon that's kind of come out from all the discussion is that it's not uniform. The impact is not uniform. What I have up here is from the World Trade Organization for different commodities. And what it's showing is from all countries to all countries what the level of tariffs are. And the way to read this is if it's more pink, it's a low tariff, less than 5% up to that dark red. And that means it's above 35%. And so in the top left, it's sugar. And you can see for even in this case, the United States has pretty high tariffs when it comes to sugar. But compare that to animal products where it's almost nothing. And look at Canada, how that compares with the US. So every commodity is protected a little bit differently on how important it is to that country's economy and how important they think that sector is to their own protection. And so at this point, I want to bring in Dr. Bruce Arnson because he teaches all the SC3X global supply chain things. And I wanted him to talk specifically about the aluminum industry because it's a great case study, great example. So Bruce, can you talk a little bit about this? Sure, I can. Thanks, Chris. So the aluminum industry in some senses is similar to lots of other industries in the sense that many industries in the United States have lost jobs. They've moved overseas, shoes, clothes, TV sets, washing machines, cars. And of course, this has hurt American families and has caused a lot of pressure on government leaders to do something about it. And this is true of the aluminum and steel industries as well. For example, the current demand for aluminum in the United States is about 5.5 million metric tons a year. US production of aluminum was as high as about 4.6 million tons back in 1980. And now the US capacity has been reduced to about 1.8 million metric tons. That's down about 70% of the former capacity. And the United States production is only 0.8 million metric tons. That's down about 86% since 1980. So there's a tremendous overcapacity of aluminum manufacturing in the world. The worldwide capacity for aluminum is about 72 million metric tons. A 40 million metric tons of that is in China. So the United States is really being hurt by this flood of low-cost aluminum into the United States. And now because of this, the US aluminum plants are now working at only 48% capacity, which is too low to stay in business, okay? Each year more aluminum smelters in the United States closed down and are shuttered. Now aluminum steel and steel are different than shoes and TV sets and washing machines. They're actually pretty vital to an economy. Aluminum is used in so many applications. I'm sitting here looking at the cans of soda that are sitting on my desk here. But for energy transmission, all kinds of vehicles and products, planes and trains and boats and cars and containers and packaging, bridges, windows and doors manufacturing. And of course the defense industry also uses a lot of aluminum. So the US administration has decided that the United States needs to retain at least a minimum level of aluminum production capacity in the United States. Now sure, right now the United States can import all the aluminum at once from other countries, but in a worldwide crisis that might not be possible. The United States only has five aluminum smelters left in operation. And so it's kind of unfortunate the whole aluminum tariffs were portrayed by the administration and the press as an effort to keep jobs in the United States and to alleviate the balance of payments. Well, it's not gonna do much for either of those actually. This is kind of a distraction of what the real issue is is retaining some aluminum manufacturing capacity in the United States. And so let's talk about the aluminum tariffs that were imposed. They were first announced on March 8th of this year, 10% on aluminum, 25% on steel. Now it's interesting that the goal was to restrict the imports of aluminum into the United States down to 86.7% of their previous level. And that was calculated if that happened it would allow the US, remaining US plants to be used to 80% of their capacity which was considered to be sustainable. Currently, they were using only 48% of their capacity which was not sustainable. They would go out of business. And so the government actually did a lot of analysis and came up with two alternatives. One alternative was if they imposed a 7.7% tariff on all aluminum imports from all countries of the world that would drive down imports by 87% of their prior value or they could impose a higher 23.6% tariff on aluminum imports just from China, Hong Kong, Russia, Venezuela and Vietnam. So those are the two choices the administration was presented with. So let's sort of what happened. Let's kind of walk through the timeline of how we got to where we are today. And the timeline is kind of confusing because every time an announcement was made it was also a caveat that, yes, we have lots of these ongoing discussions and so the situation might change. So on March 1st, steel and aluminum tariffs were announced 10% aluminum, 25% on steel and that we're beginning discussions with Canada, Mexico, South Korea, Argentina, Australia, Brazil and Europe. And of course the airways were flooded with threats of retaliation and so forth. Now on March 23rd, the tariffs actually went into effect on aluminum steel and this affected many, many countries except the ones we were having discussion with but especially China, it affected $2.8 billion of imports from China to the United States. And then shortly thereafter on April 2nd, China retaliated with tariffs on aluminum scrap, pork, fruit, nuts. The total was about $2.4 billion of US exports to China. And then on June 1st, those discussions ended and the United States removed the exemption on Europe and Canada and Mexico. So they were gonna be an R exposed to the 10% tariff on aluminum. And then on June 22nd, as expected Europe retaliated against the United States on $3.2 billion worth of goods that went into Europe and especially they chose iconic items like bourbon whiskey, blue jeans, corn, motor boats, steel, various aluminum products. And on July 1st, Canada is by far the largest what, importer into the United States of aluminum. They retaliated with tariffs on $12.8 billion of exports of steel, aluminum, food and consumer goods. So by the time you got to July 16th, five different economies had retaliated against the United States on $24 billion of US exports. The United States then, the government announced 12 billion dollars in subsidies to the farmers who were hit by the retaliatory tariffs. A soybean farmers, corn farmers, fruit, nuts, beef, were all announced for subsidies. Then kind of an interesting side issue on August 10th, the United States imposed a 50% tariff on steel from Turkey and 20% on aluminum. And of course, four days later, Turkey retaliated with tariffs on cars and alcohol and tobacco. The current situation as it stands today and it's actually gonna change tomorrow, but let's talk about today. There's currently a tariff of 25% on steel in all countries of the world except Argentina, Australia, Brazil and South Korea. And there's an aluminum tariff of 10% on all countries of the world except Argentina and Australia. There's, for some of the countries, there's a quota on steel from Argentina, Brazil and South Korea. And there's a quota on aluminum from Argentina. Interestingly enough, the Australians seem to be the only ones that are exempted from the tariffs on both steel and aluminum. So I guess a final word I'll debut with two final comments is that once a trade war gets started for whatever reason, emotions get involved, national pride and so forth. And the war can spread to all sorts of sectors of the economy that would not have thought that they would be affected to start with. The second comment was, in retrospect, it would have been nice if the tariffs on steel and aluminum had been presented very differently around retaining some minimal level of capacity in the United States as opposed to be presented as punishment against another country. Things would have got a lot smoother if it had been presented differently. So Bruce, do you think there's a different way that this could have been approached whether it's a direct subsidy for them instead of the trade war or is it just communication? That was- I think communication would have gone a tremendous to have countries. I think when people understand that there's only five smelters left in the United States and that for national security reasons and for the health of the economy, it's a good idea to retain at least some minimal level of this capacity. As you know, it was not presented that way. And that's what infuriated people and countries all around the world. So I think mainly a managed communications could have been done much better. Okay, great, thanks for that. And what I wanna do now is turn it back to Alexis but I wanna also start a poll here because I wanna give a different example that Alexis been doing a lot of work in palm oil. And so you can talk a little bit about this but I wanna try to talk a little bit about what the impact of the China-US trade war, if you wanna call it, has had on certain industries in Southeast Asia. So Alexis, you wanna talk about that? Yeah, absolutely, thanks, Chris. Yeah, so as Bruce is touching on, really these trade tensions are going to affect all commodities but we really don't know what the scenarios are gonna be and they're really hard to predict. And so actually with the 25% tariff based on US soy, different relatable oils have actually been impacted by that. So actually palm oil, which can be used as substitute for soybean oil and other vegetable oils actually took a hit after that imposed tariff because the oil, the edible oils generally follow each other in pricing. But actually what's interesting is that at some point, palm oil probably be actually impacted, the sourcing of palm oil will be impacted positively as a result of this. And so in some regions, as you can see here on the map, a much of the palm oil is produced in Indonesia and Malaysia but also some in Africa and Latin America. So regions that actually are producing palm oil might actually see a bigger surplus in demand. So the reason for this is China imports about 33 million tons of soybeans from the United States. So that's about a third of China's soybean imports. So with that increasing price for them, they're either gonna need to go and source soybeans from Brazil and Argentina at higher prices, but also possibly insufficient supply. So at that point, the decision needs to be whether a close substitute could meet their needs and palm oil being a close substitute could actually be used for that. So regions that are producing that may see that there will be a better performance as they complete for the share of global vegetable oil markets. As we can see that, and for those of you that are following the course, we're actually going to be touching on palm oil in the next week and week 10 exogenous factors in terms of palm oil and its production and its impact. And so this is interesting to see how global trade tensions are playing in with the production of palm oil and where the demand is growing. So we see this how in sort of unintended consequences of how US soy farmers are related to possibly Malaysian palm oil farmers and how they're kind of coming head to head in these trade tensions and how they're kind of being pitted unintentionally against each other. So this is sort of what we're seeing in recent days. We'll see if this actually happens and what is kind of becoming the alternate market for soy as this duty has been placed on American soy, but that's probably a likely scenario. Great, yeah. So palm oil in case you haven't taken SC3X yet is something you touch every day, but you don't know you're touching it. It's in everything. I have a poll going and I was asking, which industry do you think will be hardest hit by trade tensions? But to be honest, looking at it, I can't see a sector that isn't listed. So I'm guessing everyone listed their own sector, although it looks like automotive in all its different spelling forms might be the biggest one, to be honest, if you put it all together. Because they have automobile, automotive. Autos, yeah, yeah. Online education, nice try. Nice try, I don't think so. I know he did that. Online education, yes. But let me ask the reverse question that Alexis kind of hinted at. So what industry do you think will thrive? Because they're not always losers in this and sometimes there are benefits and it's those unintended ones. So I'll give you guys a couple seconds to respond to that. And then once we're done with this poll, oh, there we go, it's live. Once we're done with this, we'll start going to questions then after this is done and we'll answer some of your questions. But I think my big takeaway from this and the big question I have, and I'd love to have anyone chirp back in, Bruce or Alexis or Eva. So you have all these uncertainties, things happen, what do you do? What should a supply chain do? What are the proactive things? And it seems like treating it like an unintended event and increasing your resilience is one thing. But a lot of the things we talked about for offshoring or on-shoring or changing your manufacturing footprint, a lot of that, maybe this is something that's gonna trigger that. Yes, definitely. I'm also thinking about changing single suppliers to multiple suppliers and considering to our, not all the, also different locations but different suppliers for the same thing. So yep, I think these are some of them. So let's say who will, legal, great, great. The lawyers win, finance, okay. So again, there's a pretty wide range of things. And I think it's gonna be really geographically specific depending on where you are in the world. And we'll see how it actually turns out. All right, and with that, I wanna wrap up and leave the last 15 minutes. We have about 15 minutes left for open-ended questions. And again, I encourage you to go to the Slido website and actually go to the questions. And hopefully some of you have been upvoting different questions. I see that that's been going on. And we'll start from the top. And so the first one, present trade tensions highlight the impact of unknown unknowns. How do global supply chains handle this category of risks? How can supply chains be prepared in advance? This is something that's covered in week nine. So I don't wanna steal any thunder from Professor Sheffey. And I hear there's a couple of books about this. And so the way you think about this, one way to think about this is that these are things you can't control. As a company, you cannot control the national policy unless you have a really strong lobby. And so these are things that are acting on you. And so you can't prepare for them necessarily knowing exactly what's gonna happen, but you can set yourself up to be a little more prepared for different things to happen. You can be a little more flexible. And so in the week nine of us, C3X will talk more about that. And also he talks also about redundancy. So how to, you can have a second supplier in order to fulfill this raw material or whatever. So redundancy of distribution centers, warehousing. So all of this, but there are trade-offs behind that. Always a trade-off. If you increase the cost, you have better service level. So these trade-offs are discussed in week nine. So yep. Yeah, so next question down. For a comment? Yeah, please first. Yeah, interesting. I was involved in a project many years ago where we optimized our global supply chain network based on the duty rates and the tax rates globally at that time. Just for digital. That's right, with the OC's help. What was very interesting, now I teach the class of global supply chain management. I look back and all of those duty rates are wildly different than they were. And the tax rates are wildly different. Countries that were expensive and taxes years ago are now cheap and vice versa. So the supply chain, if you optimize your supply chain around the current set of international factors, be prepared within about two years to re-optimize it because those are gonna change. As you saw, the US tax rate went from 35% down to 21%. I can imagine linear optimization models changing all over the world to adapt to that. So that's just an example. The nice thing is the structure, it's the parameters that change. But you can think about it, but I'm sure your linear program still runs today, right Bruce? Right. It's only been 30 years. That's right. Hey Bruce or Chris, could you talk a little bit about, it's interesting the only company I've seen that's announced a change in manufacturing was Harley Davidson. Could you talk a little bit about the lead time on different products and why Harley might be out in front of this compared to others? That's a good question. I don't have any great insights into that to be honest. I know that a lot of their market is bigger in Europe than it is here in the US. And so I know there's been, it depends when they're either on or off the political bandwagon, depending on how the policies are set. I could comment on that if you wish. Sure. So first of all, I think Harley Davidson was thinking about that long before the tariff came into play, right? And it just was an interesting, they were able to move on that very quickly when the tariff came along because they had already been working on the idea. I think that a lot of companies in manufacturing companies and also interesting the investor community especially the investor community of the United States is kind of watching what's going on wondering is how long is this really gonna last? How lasting are these effects really gonna be? The US investors have not been changing their portfolio mixes based on this trade war so far. And I think a lot of company executives are sitting back saying, we're not gonna change our supply chain design until we understand is this our long-term thing or it's all gonna be over in a couple of months and then it'll be back to business as usual. It's too soon to tell. Yeah. And plus a lot of companies still absorbing the tax change from last year, bringing the corporate and so that I haven't seen tremendous change in that yet either. So there's a lot of things going on at the same time. Bill, did you have something else you wanted to say? No, I was actually asking the question follow up to Bruce. Okay. So I just wanna take a higher level view here. We have been very industry-specific. Now, considering that US is a huge economy, is it number one or number two? I don't recall, probably number one still. But the current tensions are precipitated by US actions, unfortunately. And the trade war is always going to have an impact in terms of curtailing trade flows. So how is it gonna play out if the current tensions continue? Do you see that there will be a lesser role in international trade for US, whereas other countries and regions such as you may pick up the slack and they might kind of get ahead of us, get ahead of US in terms of- It's a great question. I think the answer is that no one knows, to be honest. We have to see how it plays out, we did a project several years ago that looked at different scenarios or what the future could be. And it could play out that you see a lot of global or regional trading patterns instead of a global one. One of the extreme scenarios would be that globalism ends and everything is produced local. I don't see that happening, but it might happen in segments or certain regions or maybe for certain sectors. So we'll see, but I think it's a little early to make any firm predictions. Only politicians can do that at this point. They can change from one day to next. So that's our hope. I want one tool that you can use is the scenario planning that we are going to introduce in week 11. Week 11, there you go. So it's an opportunity to play with these extreme scenarios. And this is coming soon, in two weeks. Actually, we already introduced scenario planning. We introduced it in week three, Alexis. As part of strategy. Scenario planning is a week four, but then we'll do the Scream resilience exercise in week 11. Yep. So you guys need to take SC3X if you haven't already. I need to take that and play with these games. Join me. So next question. Ramon had a question in, where's the WTO? World Trade Organization, all this? Can this trade dispute undermine its authority? And what happens if the WTO fails in its mission? Excellent question. Next question. Excellent. The big thing is it doesn't, it has some teeth, but I don't know. Bruce, do you have an opinion on this? Well, you know more about this than I do. Yeah, the WTO and all the rounds, the Uruguay rounds and so forth before that, we're all trying to do what your first graph showed, which was to bring down barriers between countries. And in fact, duty rates have increased enormously over the years. It'll be interesting to see, there have always been people trying to gain the system in the WTO and unless the developed countries are asking for breaks on some of the rules and so forth. So the WTO has not been super strong in the past. I don't think they're gonna have much impact or ability to stop this kind of a trade war. This kind of a trade war seems to be fueled a lot by emotions and national pride. And I think eventually it will calm down and people will go back to more obeying what the WTO wants. But I don't think the WTO can, it's like the United Nations are trying to stop local conflicts, they can try, but they're not gonna have a whole big impact on it for a long time. Okay, next question down. Hey, Susan Madrid, in my work, I've noticed a big increase in ocean freight rates from China to Latin America in the recent months. Does this relate to the tariff problem? I don't think they're related personally. I don't think so. I think this moves up very recently. And no fuel has gone up. And so it's caused that in transportation, surface transportation in most countries, not just the US, but Europe, India, Brazil had a nightmare going on with a strike. So there's a lot of increases their intentions for surface transportation. I haven't seen too much of increases for ocean coming into the US to be honest. But I haven't been too close. Next question is what could be an upside to disrupting existing supply chains? You wanna handle that Ava? It's a hard question. Yes, it's very hard, an upside to the tariffs. Yeah, I don't quite understand the question, even though a bunch of you voted for it. I don't know. I think one thing is if tariffs all went away, I mean, for supply chains, here's the thing that one of the lessons that Bruce teaches is that everything we teach in SE0X, 1X, and 2X, I hate to say this, but it almost goes out the window once you get into tariffs and duties and things like that because what makes sense from a pure total cost equation gets thrown out the window if suddenly the country doubles tariffs. And so this explains why there's a lot of pharmaceutical manufacturing in Puerto Rico supporting the United States. It makes no sense if you look at a network, but it makes perfect sense if you look at some of the historical reasons for the duties, the tariffs, and the tax breaks. So a lot of times what you see these tariffs create artificial impacts on the supply chain. I call them artificial because they're not, I don't teach them SE1X, but it's essentially, these things move you away from what would make sense as a rational system, at least academically. Yeah, and in Europe, many years ago, they used these tariffs in order to protect and have a barrier in between one country and the other and the negotiation between them, but currently I'm not seeing this. Yeah, so Martin asked how should a company react to this trade war if they have a fairly rigid supply chain scheme? We can just stop right there. You shouldn't have a fairly rigid supply chain scheme. I think one of the things that you're trying to think is about how do you be flexible for this? How can you respond for this? If you're locked into one supplier and suddenly that supplier, the tariff gets raised tremendously, yeah, you're gonna be subject to the wins of that. So I think the key thing is to add some flexibility to your supply chain. And to be prepared for the uncertainty that is associated to this environment. The next question about what affects, I think we talked about some of that now. And so we're seeing what I find fascinating is the retaliatory actions that countries take. Like all of a sudden bourbon is being attacked. And a lot of it is not just comparable goods, but they target political districts. And so they know how people are gonna vote. And so if you're a congressman and all of a sudden your district and you make bourbon and suddenly you get targeted for that, you're gonna, it's gonna change the way you vote, right? Because that's now going in your backyard. So countries are not stupid when they do this. And so the retaliatory tariffs are really interesting to look at because it kind of gives you an idea that they know the political landscape that they're trying to affect. I think the relationship with your supplier matters more than now than ever as one can collaborate to find new win-wins. What do you think? Sure, I agree. I agree too. That's a good statement. This relationship matters to have even more close relationship with more suppliers. Yeah. So I'm gonna start picking random questions that I like to answer in the remaining three or four minutes that we have left. So there was one, where was the crossing board? The second one by Andrew. Currently supply chains are very long. Crossing board is multiple times to optimize different cost levels. Oh, did you do that, Inma? Thank you. Oh, good. Do you think firms will revisit supply chain setups or just charge it to consumers? I think they're gonna, they have to revisit how they have this set up. And I think in the short term, they are not going to charge the consumers, but maybe in the long term it's going to have an effect of that. So again, it's a long term, short term, long term question. Prices are going up for consumers for certain things because commodity prices are going up. And as I said before, transportation rates are going up both within domestic, within countries and also between countries. So we're seeing some pricing getting pushed to consumers, but it's very hard to do that in the competitive, competitive industry. We'll see that. All right. I think this is playing out a little bit on sort of regional scale as well, right? With sort of the Belt and Road Initiative in China, kind of linking the 70 different countries by shipping and rail. So I think that different regional initiatives are also kind of linking into that that are going to impact supply chain. Having more regional connectivity is going to be a big factor coming up as well. Yeah. I agree. Yes. What are the best framework techniques to evaluate supply chain resilience in general? You will discover in week nine, Professor Shev is teaching this exactly that. He showed nice framework to do that. Great. Yeah. With that, we're about two or three minutes left. So what I want to do is just kind of wrap it up. And I always have to show a picture of the dogs in every presentation. And so I want to thank everyone for coming into this and I have one more poll that I wanted to do. Let's see. There it is. Let me just get to it here and turn it on. Because as we do more of these, this is the first of one of these events that we've done that isn't tied to a specific course. And so we want to know if we should do more of these. So let us know. But I wanted to know what topic would be interesting to you. One would be one that Alexis brought up, the Bridge Road Initiative, because there were really some interesting things going on. The Economist had a really interesting article. I think it was a Bangladesh that just defaulted on one of the loans. Was it there? Yeah. And then another Malaysia is starting to walk back from some of the investments that they made because some of the terms, the secret terms were they needed a 36% return on investment every year. So it's interesting to seeing what's come out of this but I'm curious to what topics you guys would like to talk about. And Ian was very happy that blockchain is listed since that's her area. But with that, I'd like to thank everyone for joining us here. And if you have any suggestions on what we can do differently or better or what you'd like to see, please let us know. Thank you very much for coming. Keeping touch through the MicroMaster Portal, those that are not in a course now, those that are in a course, please be active in the discussion forum. Best of luck for those that are going to take the exam this weekend. We will be here. That's all. Virtually. Virtually. Thank you so much. Thanks for coming people. And if you have a colleague who is not taking the courses now, get on them to take the courses. We need everyone to take these courses. Thanks guys. Take care. Thank you.